Expand, Contract or Hold- Optimizing Stores and finding Growth
2020 has been a system shock to business, retail in particular. The industry has been experienced a dramatic split between retails who have been successful, often wildly so and retailers are struggling to hang on as consumers reprioritize their spending and change their buying habits in reaction to the pandemic. They’ve seen a massively accelerated adoption of digital commerce across the categories and demographic groups. The way customers research, buy, receive and return goods has changed quickly and dramatically as customers embrace touch free selling channels.
Consumers are spending exponentially more time at home during the pandemic. This has proven to be a boon for home improvement and the do it yourself segment. With few entertainment options open, they turned to the outdoors, their hobbies and passions and went out for individual participatory sports in droves. Retailers in these segments have enjoyed record sales.
On the other end of the spectrum, with no where to go and office shut down, apparel retailers have struggled as demand for their products has evaporated. Retailers who weren’t prepared to transition to digital commerce have struggled to find revenue as business hours and capacity are restricted or closed.
The industry has been disrupted on a really massive scale. Change has been forced on retailers, an industry whose track record in being nimble and adopting to new patterns or business models over the years has been something a bit less than great.
Change is not “death”
Change is always good for business. It drives innovation and motivates businesses to evaluate operations and find new efficiencies. It’s good for business and it’s good for customers. The global pandemic has forced business to think differently about their operations and their customers. It’s forcing a reassessment of their investments, particularly their investments in Real Estate, often their largest asset.
Assessing the “Fleet”
Best in class retailers are always assessing their operations and looking for places to make improvements. This is especially true in merchandising and logistics. When it comes to evaluating stores, it seems that the cadence is much slower. Not surprising, store changes are expensive and, when it comes to closing stores, can affect the brands perception in the community.
The global pandemic has presented the industry with a unique opportunity to assess their operations and implement changes that will position them to respond better to changing consumer demands and set them up for stronger performance after the pandemic subsides.