April 30, 2021

Reopening Retail: A second chance to make a first impression

Every week, the economy – and our world – opens up a bit. You can feel the traffic picking up on the roads. Sports venues are even accepting fans for the first time in over a year.

The numbers look mostly good when it comes to the growing legion of the vaccinated, and the shrinking numbers of the sick, the ventilated and the dying.

For the first time in a year, there’s reason for optimism.

We’re vaxxed, waxed, flush with money to burn, and ready to emerge from the pandemic as our better selves.

Snark aside, this is the time, and this is the place, having been “battle hardened” to recognize the golden opportunity post-pandemic; a second chance to make a first impression.

Some observations:

  1. People have been in sweats and leggings for too long, which bodes well for apparel.
  2. People are going to want to get into shape, which bodes well for fitness and healthy living.
  3. Specialty retail and specialty restaurants can recover strong given the uniqueness of their products and the retail experiences they offer.
  4. The supermarket category has shined in the pandemic, which is ironic since not that long ago, conventional wisdom was that supermarkets were a doomed category (once Amazon bought Whole Foods).
  5. The pandemic forced retailers to develop omni-channel strategies at an accelerated rate. Post pandemic, omni-channel can be a source of defensibility and differentiation, but is also can be a source of tension between retailers and consumers, as I note below.

In the big picture, I see a lot of pent up demand, and a full sprint back into all things lifestyle snd living our best lives, which bodes well for brick and mortal retail.

The general macro indicators (rent payment, sales, store traffic) look really good, as do the aspirational indicators.

As we move into vaccine at scale, in most merchant categories retail starts to be able to support pre-pandemic store capacity levels.

Factor in the torrent of stimulus dollars, a consumer who’s pent up to get back to normal… and with money to burn, and the economy feels like it should only get stronger in the months ahead.

 

A crisis is a terrible thing to waste

But, therein lies the rub. After a year of Covid-19 related gut punch after gut punch, for retailers and retail shopping center owners, there is a tendency to exhale, and let down your guard…and you can understand why.

More categories than not have been operating at a deeply reduced capacity for a year now. If you think about it, there is no way these businesses are generating enough sales to operate at favorable margins relative to historical levels.

Some examples. A sit-down restaurant is heavily challenged when it can only do takeout, delivery and outside seating.

A hair salon can’t generate the same revenue when social distancing mandates force the operator to cut the number of stations by 40%.

Don’t even get me started on movie theaters, which are fighting multiple existential battles.

The list goes on and on, and you still have a number of tenants that owe money from last year’s wave of rent relief requests.

In such a place, it’s seemingly understandable to: A) Exhale; B) Focus on liquidity; and C) Assume the consumer understands your plight, and will cut you some well earned slack.

You previously offered curbside pickup? Repurpose that resource as a hostess, and only offer curbside pickup during peak hours.

Your updated store hours say 9PM close (up from 7:30PM in the pandemic). But, maybe it’s slow so you tell walk-ins and to-go orders that the kitchen closed at 8:45PM.

Up the prices a couple bucks here and there.

Winnow portions a tiny bit.

It’s not like any of this is unreasonable, not to mention that it’s fiscally prudent.

But, it’s also the mini version of “death by a thousand cuts.”

 

Avoiding Unforced Errors

Such thinking is a mistake for two reasons.

One is a misreading of the consumer. During the pandemic, the consumer understood that we were in battle mode.

They grokked that it wasn’t business as usual, which lead to a lot of gratitude and good will from consumers to retailers just for persevering, reinventing and continuing to service the consumer.

Well, guess what? The definition of the situation has changed. Plus, let’s not forget things from the perspective of the consumer.

He, her, them has endured a LOT, paid sit-down dining prices for to-go level experiences, and were happy to do it.

Now, the consumer just wants to get out and live a bit.

“We’re vaxxed, waxed and ready to…”

My point is that the consumer will rapidly shift from understanding and acceptance, to discriminating awareness.

They’ll be quicker to re-direct their attention, engagement, dollars, regularity and retention to the retailers and retail venues that serve them best.

The consumer just wants some ME time. They’ve earned it, and are long past understanding for sub-par experiences.

This is the second reason that giving into gravity is a big mistake.

In times of upheaval, the old ways of doing things are more readily dislodged, and the consumer is open to accepting new brands, new relationships and new value propositions.

Now, more than ever is an opportunity to take inventory on the following questions:

  1. What is my brand?
  2. What promise or promises to the consumer underlie my brand?
  3. What are the key implications in terms of service delivery?
  4. What has the consumer come to expect in the post-pandemic world?
  5. What are the consumer’s alternatives to my business?
  6. How do I fare in head to head with other retailers?

Be thoughtful. Ruminate on these questions. Write down your answers.

Pick them apart, edit them further, and put them back together.

What do you do more of, less of and differently in light of the above?

Then, for whatever period of time that your budget will allow, explore these things in a deterministic fashion.

Do things that don’t scale.

Be willing to try new ideas, tweak them, rapidly iterate, figure out how to scale the winners and dump the losers.

Embrace data as part of your going forward path into a better future, affixed in the knowledge that we can Manage what we Measure.

This is the mission for forward-thinking merchants.

If you think you can’t do it, remember what you did last year to get through to the present. There’s no quitting now.

This is YOUR moment in time.

A second chance to make a first impression.

– Mark Sigal, CEO Datex Property Solutions