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The Pandemic - A Trend Analysis - Issue# 2 - What's retail going to look like?

For weeks, most stores were closed. You could not get a haircut, or browse a men’s or women’s clothing store. Grocery stores were open, but how you shopped, and when you shopped had changed, sometimes dramatically. We all adjusted, but will these changes be permanent, or simply be an aberration until a Covid-19 antidote is available? 
This discussion will not delve into commercial real estate, shopping malls, or strip malls; and how the changing of retail will affect these slabs of concrete. Some thoughts and questions, and many unanswered questions. …

  1. Big Box stores benefited in the short term as they remained open, while many competing smaller operations were forced to close by Government orders. For example, nurseries and other garden shops were closed, but similar items could be purchased at Costco, Home Depot, and Lowe’s. Is this fair? Are there any long-term ramifications?
  2. Will people be afraid to shop at smaller-Mom & Pop-stores? Big Box stores and large operations can more easily afford extra people to clean and sanitize their stores. Small operations will not be able to afford this type of expense. Is this even an issue?
  3.  Concurrently, will people shop in smaller stores as fewer people will be inhabiting these stores, and the likelihood of catching COVID (or anything) may be less? Again, is this an issue or real concern?
  4. Traditional Retail is changing, but it is not dead. The biggest adjustment is the trends that have been occurring over the last few years will be accelerated. 
    •  Traditional department stores such as JC Penny, Macy’s, and Nordstrom’s will either need to update their business model, and downsize their stores, or they will become obsolete. This trend has already been occurring, but the pandemic only accelerated the process.
    • People still crave the need to shop, but will they continue to shop as they did in the past? Will events such as Black Friday be as prevalent, and will malls be as crowded as in the past?
    • With people working from home, the opportunities to “Shop from home” will be greater without the fear of oversight, or “Big Brother” watching. Will this accelerate the conversion to E-Commerce?
    • Instead of the lunch break of shopping, will people shop online? How will businesses create promotions, and other events, to create this new type of shopping break?
  5. E-Commerce will become even more mainstream, and everyone will try to jump on the Direct to Consumer (D2C) bandwagon. 
    • What will the next generation of E-commerce look like?
    • Will brands, and many products, become commoditized as they are more easily purchased online. DIFFERENTIATION will be harder to highlight with shop, click and buy. Will the lowest price become the key to success? 
    • Creating a SUCCESSFUL D2C brand, and experience is not easy. If it was, then Amazon would not be the behemoth that it is.
    • Platforms such as Shopify makes D2C easier for small brands, and retailers, to grow their E-Commerce business. Who will be the next generation of Shopify?
  6. Will brands come and go more quickly with D2C?
    • Technology and algorithms have accelerated financial market swings. If you follow the Dow Jones, or other financial indices, what used to occur over several years now happens in months, or weeks. 
    • Will a similar pattern happen with brands, and E-Commerce sites? 
    • Will scams become more prevalent, with defective goods not being able to be returned due to transient shopping sites?
  7. Will Grocery Stores be forced to change?
    • Will stores stock only their bestsellers and major brands; and will they eliminate slower selling items, and/or not try new products or brands?
    • Will there be less selection (4 brands of peanut butter instead of 10 or 15)?
    • How will major chains compete with Instacart and other home delivery services? And do they want to compete?
    • Will major grocery store chains create e-commerce sites to compete with Amazon and other e-commerce sites?
    • Will one-way isles be the future of shopping? And will anyone ever realize they are walking the wrong direction in an isle? And will local police departments start issuing citations for walking the wrong direction to increase local revenue lost during the pandemic?
  8. Personalization. This is a term that has been talked about for several years. 
    • Supposedly, with artificial intelligence, and machine learning, people will have a greater personalized shopping experience. But the technology has not delivered on this advance, or the platforms/apps that do exist are still in their early stages.
    • And are people leery of how intrusive AI can be in their lives? “You cannot order a 10 lb. container of M & M’s per Doctor’s orders.” 
    • Will Virtual Reality and Augmented Reality finally allow E-commerce sites to allow people to virtually “try on clothing and shoes”? And will your Mother be able to “virtually” shop with you? And will a Father be able to tell his daughter, “You will only be allowed to buy that dress over my dead body!”
  9. Restaurants. This is the industry most affected by the pandemic.
    • Restaurant workers were one of the major groups affected by the pandemic. Kitchen and wait staff was already in short supply; will it be more difficult to find restaurant help in both the short-term, and long-term? How will technology, robotics, and machine learning permanently change the restaurant industry?
    • Restaurant Business Models will permanently change. Pizza shops could create pizza in a kit type meal to make at home. Products related to restaurant brands will become more prevalent. Imagination, and ingenuity, will be the key to restaurant survival.
    • How will Yelp and Open Table deal with the changing restaurant scene? 
    • Will people eat out more or less once the pandemic subsides? Will they discover it is less expensive to eat at home? Or will they discover that THEIR “home-cooked meals” leave a lot to be desired?
    • Will people begin to host dinner parties again, and shun meeting at restaurants? Will girl’s night out take on a new meaning? How will this affect catering and takeout orders?
    • Short-term people will utilize takeout much greater than eating in the restaurant. How will this change long-term?
    • Will restaurants try to compete with food and meal delivery kits?
    • Will additional staff be hired, and be devoted to takeout orders? How will they be compensated, and will the “tip system” be reduced or eliminated?
  10. Will Retail services grow as millennials start to use many of the services used in the middle to late 1900s?
    • Dry cleaning and laundry door-to-door services are being developed.
    • Milk delivery is being developed.
    • Will companies like Uber, and Lyft, add to this new trend? Will they be the “last mile” for smaller (and larger) operations?

Early-stage businesses or markets segments that may be changing over the next 1-5 years:

  1. Grocery Store Operations. New business models will be developed. Instacart, Anycart, and other apps will dominate the conversation. How will Kroger’s, Walmart, Target, and independent operators (Giant Eagle) change their business model?
  2. Clothing Stores. Shop from home will accelerate, but not in the true E-commerce sense. In the middle of the 1900s, personalization was the key to retail. Shop owners knew their customers' tastes and styles and would cater to their tastes. With the growth of large department stores and discount operations, this personalization disappeared, except for high-end affluent shoppers. Companies and brands that use technology to understand customer’s tastes, and ship items directly for “try, purchase and/or return” will grow in the next decade.
  3. Clothing Needs. With people working from home, the term “Business Casual” takes on an entirely new meaning. Suits and ties for men have been declining in sales, and will this trend accelerate? Will fashion aficionados and divas develop “pajamas” as the new business normal for Zoom meetings? Will this become a fashion trend? Brands that may grow include Nike, Under Armor, 
     

 

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