We are entering an exceptionally exciting time for retailing. Nationwide, the U.S. is experiencing an entrepreneurial surge not seen since the tech boom of the 1990s, said Kenan Fikri, research director for the Economic Innovation Group in Washington, D.C. According to an analysis of Census data by EIG, "Through September, Americans have filed a record 1.4 million applications to start new businesses – the most through the third quarter of any year on record."* Experts suggest it’s being fueled by rising household wealth and shifting life priorities, after millions of Americans were tossed from their jobs during the pandemic.
Consider these examples from the State of Alaska. As reported by Alex deMarban, "The pandemic pushed these Alaskans to quit their 9-to-5 jobs and start their own businesses. Alaskans who launched businesses during the COVID-19 pandemic say they’ve been rewarded with personal satisfaction they never got from their 9-to-5 jobs. Many say they’re not going back."**
These new business owners often said they wanted something different in life. “My job wasn’t bad, I just knew I wanted more,” one said. “There are so many people, maybe because of the pandemic, who have started to focus on fulfillment from jobs.” Hope that one or more of them open a shop near you. The added energy, their new/different retail and merchandising concepts, and the curious shoppers they attract should be welcomed! The surge of entrepreneurship mirrors the personalities of many Millennials and those born even more recently. "I want to be my own boss!" "I don't want what happened to my parents to happen to me." "I want a piece of the action." "I don't care what anybody says. I can do it better!" Meanwhile, existing retailers have been reinventing themselves to survive. The pandemics prompted significant operational changes.
Retailing always has been a dynamic and changing industry. What propels that change is always changing as well.
Don't scoff at them because of their youth, or their retail naïveté. There are millions of them, and they are motivated. This surge will be powerful, bringing more excitement, newness, and challenges to the retail industry. So much fun! --- * The Startup Surge: Business Formation on Pace to Break Record. Daniel Newman, Economic Innovation Group, October 15, 2021. ** The pandemic pushed these Alaskans to quit their 9-to-5 jobs and start their own businesses — and they aren’t looking back. Alex DeMarban, Anchorage Daily News, November 6, 2021.
The Retail Owners Institute® has developed a retail strategy for "Inventory Management Going Forward." As we often do, it was recapped as an unassuming chart (see above) identifying the Five Stages of Merchandise Mix Management, from "Before COVID-19" to the "New Normal?"
Throughout the pandemic, millions of shoppers – including the older Baby Boomers – discovered the benefits of online shopping. Then, as brick-n-mortar retailers scrambled to survive, the increased availability of delivery, curbside pickup, BOPIS (Buy Online, Pickup In Store) and BORIS (Buy Online, Return In Store) was well received by a broad swath of consumers. We see that this has brought heightened awareness of two different retail strategies: Convenience Retailing versus Destination Retailing.
And here's the deal: retailers now must choose either one or the other of those two strategies. You cannot have one foot on the dock and one foot in the boat. You DO have to decide!
That's a sign of the times, isn't it? While retailers are more accustomed than most folks to cope with change, 2020's unrelenting flexibility tests have been a challenge. Forget about five years. Retailers have to be ready for the next five months! It's back-to-school and then Holiday. The only certainty about the next five months is that they will probably feel like the past five months. Yet you still must run a retail business. And that means you still must buy and sell merchandise. The opportunities – and the pressures – are mounting.
"Of course I want it today. If I wanted it tomorrow, I would have come in tomorrow." That's what we call "retail time." Retailers are comfortable with that pace; they enjoy the variety; they welcome the need to change and adjust. But, instead of just keeping life interesting, 2020 seems to have gone overboard in bringing changes and disruption to us all. The triple pandemic of the virus, the economy, and the civil unrest. And oh yes, it's also an election year. Enough already, right? We think the most challenging part of this is the effect on our sense of time.
About a year ago, as the pandemics were beginning to hit their stride, we introduced a framework for retailers to "rethink your merchandise mix."
As depicted in the chart above, we cautioned that once the lockdown was over, as customers resumed shopping, retailers should be prepared for (1) reduced sales totals overall; (2) significantly re-balanced merchandise mixes, initially dominated by "basics/never-outs."
Further, we anticipated that the merchandise mix would continue to change as we re-emerge from the effects of the pandemics. And we urged retailers to take this overall construct and adapt it to their own situation; to develop their own customized strategic response.*
Now, one year later, here's how this can become "news you can use" to quickly produce your Big Picture buying plan. Especially in the spring of 2021, some practical answers to "What to buy?" , "How much?" and "When?" are likely to be very welcome.
Remember thinking that Amazon was the most disruptive force to happen to retailing? (Well, at least since Walmart was the most disruptive....) However, the coronavirus pandemic eclipses them all. No matter where you live or do business, it is not whether, just when, COVID-19 will impact your life. Disruption with a capital D!
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