What’s Up with the Upcoming Holidays
Upcoming holidays – people have not been going on vacations or out to eat etc. As a result they are saving more money so the assumption is that they will have more money to spend on more expensive gifts this holiday season. However, research shows that people intend to spend less on gifts this year than last year. This trend has been attributed to psychological effects – in addition to Covid, the elections and social issues. (NOTE: A colleague has said that the purchase of second/shore homes in NJ has risen as a result of this.)
Black Friday Becomes A Season
No more typical Black Friday surges. Black Friday is already stretched to 30 hours and is on its way out altogether. Christmas season will now be very, very long (and you thought it was long before).
The Retail Experience Part 1
Robin Lewis said that the stores that will continue to do well are those that provide experiences, and not just products. He cited examples like Apple, Lululemon and Starbucks.
The Retail Experience Part 2
One good outcome from Covid is that brick and mortar retail is reducing the square footage per customer – it is shrinking from the 28 square feet that was the pre-Covid norm. This will result in a landscape that will be populated by lots of new, smaller retailers. Listen up, small businesses.
The de-densification thing is real – people are moving out of the cities into local suburban locations and many will not be moving back. There will be a return to Seattle grunge with people sitting and socializing outdoors around fires – they will need sporty clothing to keep warm.
The Retail Experience Part 3 as a subset of Permanent Changes
Local stores that cater to local people will do well. Big stores will spin-off local stores. RFID and other similar technologies that focus on the optimization of inventory control will enable this (many already are). An example provided was that of a local outlet of a big retailer opening on a university campus. Using RFID technology, the retailer will know exactly how many items of what style will be in demand by how many students and in what timeframe. This is the future.
Where are the investors?
Jan Kniffen said that there’s low investment appetite right now. Certain exceptions include investors who specialize in distressed investments, like Sycamore Investments. But investors need the lending community, including banks and right now banks face much stricter regulations and are reluctant to step up. So, it’s a waiting game.
The two experts concluded that there is no way to predict which retailers will make it to the other side of this pandemic.
As always, one thing, remains clear. Those who can pivot will be those who stand a much better chance of surviving.