PERSPECTIVES

A frequent recommendation for how to navigate the current economic uncertainty is to be more diligent about controlling expenses, and focus on profit. (You'll see; we challenge that below.)

Hmm. Concentrating on profits is easier said than done in today's environment, with cost increases proliferating under the umbrella of inflation.

The basic definition of retailing is "selling to the ultimate consumer." 

As you know, HOW that is done, and in what location or format, continues to change and evolve. 

So, we were intrigued by this recent post on the Shopify Retail Blog: The Future of Physical Retail in a Digital-First World.*

• The "retail digital-first world", of course, is either the "pure play e-commerce retailers," those who sell only online, or the "brands" (what we used to call manufacturers) who have embraced the "DTC model," selling direct-to-consumer. 
   
• And as you know, Shopify is one of the largest platforms for e-commerce businesses. Definitely a leader of the retail digital-first world.

To us, the blog post was essentially a wide-ranging journey of discovery(and perhaps even some new-found respect for those "physical retailers".)

We think this may be a very different 4th of July Holiday weekend. 

It will not be just about red, white & blue window displays, or flag waving, or fireworks displays. Instead, there is a new mood, a new attitude that is emerging. 

First, we believe that all shoppers are reeling from being swamped by some major and concurrent attention-grabbing events and trends affecting all of us. Seemingly with no end in sight.

Consider these front-page headlines and the accompanying chart (see above) from the June 6 Wall Street Journal* – "Surplus Inventory Piles Up", "Stores Are Stuck with the Wrong Items." 

Look at it carefully, and think of your operation in comparison. How do your numbers compare? Are you as shocked as we are?

How did this happen? 

Partly as responses to the unprecedented impacts of the pandemic. 

Have you seen what the Silicon Valley venture capital firms are saying to the  startup firms they've invested in? 

While it may be tempting to smile and nod approvingly at this dose of business reality, there's a ripple effect to be aware of.

As reported in the May 31 edition of the Wall Street Journal*, "Their advice includes cutting costs, preserving cash, and jettisoning hopes that hedge funds or other investors will swoop in with big checks."  

Every day, there are all too many headlines of things outside our control. 

• The war in Ukraine. 
• The global energy crisis.Inflation. 
• Rising interest rates. 
• The falling stock market. 
• Wildfires. 
• Droughts. 
• Supply chain disruptions. 
• Rising costs. 
• Crime rates. 
• Social injustices. 
• The latest coronavirus variant.
• And...And...And...

The drumbeat of news about these events is relentless. And wearing. 

While retailers are notably resiliant and optimistic, there IS a limit to how much uncertainty one can continue to take.

Then we discovered that there is a name for all this: VUCA.

👀 New Respect for Brick-n-Mortar Retailers

Retail IS detail. And some of those pesky details are increasingly cropping up to torment online sellers. 

For example, there's the matter of managing returns. As Chris Jarvis wrote in DMM/ShoppingCenters.com*:

• "We return roughly 30% of all online purchases compared to only 10% from brick-and-mortar."
• "In 2021 retail returns jumped to an average of 16.6% versus 10.6% a year ago."
• "Research suggests that a single online return can cost two-thirds the original price to handle when we include labor, transportation, and warehousing costs." 

Meanwhile, the pure-play online retailers are confronting the ever-demanding customer expectations. 

As the second quarter of the year begins, many of us are experiencing what that fellow in the cartoon is feeling. We are not where we expected to be (and maybe not even where we thought we were!) 

Ahh yes, yet another flexibility test. The first quarter of 2022 was full of some major events, nationally and internationally, that disrupted many plans.

As you contemplate where you are now, compared to where you thought you were, and especially, where you intended to be, don't despair! Even more important, just like you do with the GPS system in your car, disregard"returning to the prescribed route."