If you are wondering what retailing might look like in the next few years as the pandemic subsides. My company inception retail group has developed five categories of retailers that will emerge from the pandemic.
There is no question that it will be a different landscape. Many businesses in weak financial positions have unfortunately already closed. Those that remain will be challenged by the same issues they had before the pandemic. It's almost as though they are in a stasis except for those that were labeled as essential.
It will come as no surprise that value brands will be some of the strongest winners. That's what's usually happened with each event after the financial crash and the Great Recession. However we've never had an event like this. Even in the Great Depression of the 1930's people were able to go out and shop, although the state of the economy primarily high unemployment made many go homeless and without shelter. That's not our situation. We have a health crisis on our hands and responsible people are doing what's right, adopting to other forms of shopping and adapting to a new normal. In fact, many online retailers have experienced strong growth because of these circumstances.
The prevailing question is will consumers return? They will slowly! But they will to a world with less stores and retailers in different selling and service models. Consumers will have changed as well. It's impossible for this not to happen, working from home, shopping online and technology that makes all of that easier. At the beginning of the pandemic I wrote an article and said; you can mandate people back to work, but you can't mandate them back to shopping. Not the way it was and few even after the vaccine will jump back to how things were. Caution may be the prevailing public thinking and that could take another year. That's why I believe that a recovery won't start until late to middle of 2022. I know business leaders who believe that it could take even longer than that. Nevertheless, smart business owners and operators have adopted e-commerce much faster. There is no other way to survive.
Here are the five groups as we see the evolution of retail unfolding.
Survivalists: Large retail chains with the financial means to ride through the storm. In the meantime they should have been preparing with strategies to improve their consumer and business models. That means when they reopen they will look a little more lean and be more aggressive in the market. Much as we have seen with grocers who are deemed essential. They have already begun to focus on how to retain their new growth.
E-merged: There are a number of retailers in the world that need a better home. Where else would be better than operating inside an organization that has strong skill sets behind driving e-commerce growth. It's not clear how many we may see of these. However we are seeing SPAC'S (Special Purpose Acquisition Companies) being introduced, simply these companies are formed to consolidate businesses and a few are focused on retail.
Underdogs: Small businesses that have survived the pandemic and out of this they create a new business model where they are clearly a hybrid which allows them the flexibility to sell and serve both online and in store. The lines will be blurred, it will be about the brand and both the online and offline models will finally be integrated as one model and one experience.
Zombies: Well yes there a few out in the marketplace buying up the assets of failed and bankrupt companies. Why? Well these are brands that have consumer respect and following but not enough revenue to be viable under their past business structures, which was hundreds of stores. Now there are buyer who look for these assets and consolidate them as primarily e-commerce businesses. Will it work? Time will tell.
E-Entrepreneurs: The pandemic has given many the time to reflect and reconsider their career paths. As such we are seeing an incredible amount of growth happening with independent businesses opening online only. It's a tough road ahead for most. It's very easy to open up an online shop but to be successful that is another matter altogether. It may cost less than opening a store. But e-commerce means you need to build a following before you can build revenue. Today on google it can cost you as much as $1.00 for every $2.00 you are driving in sales. That's a high cost for a startup. In fact it is a high cost for any business.
How different will retailing be? To start off with most of the world now has too many Malls and open shopping centres. Will we need all of them? And what happens to all the businesses inside of those venues if major tenants pullout? Some already are. The landscape is reshaping itself. Everything has accelerated in many ways we have technology to thank for our ability to work and shop from home. However we are about to see the real impact it has had on businesses, once we are in a position to reopen and stay open.
My name is George Minakakis I am the CEO of Inception Retail Group Inc and author of The Great Transition the Emergence of Unconventional Leadership.
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