As Businesses Close, What’s In Store for Retailers?
The list of retailers that have filed for Chapter 11 bankruptcy during the COVID pandemic is truly shocking. We’ve seen some of America’s oldest and most stalwart brands like J.C. Penney, Lord & Taylor, and Nieman Marcus enter Chapter 11 restructuring. Other brands in Chapter 11 include former health giant GNC, preppy icon J. Crew, Brooks Brothers (not much use for high-end men’s suits at home) Pier 1, Men’s Wearhouse, and more.
This does not mean these brands are closing for good. But it does mean significant changes and downsizing. Granted, many of these retailers were in trouble long before COVID—for example, J.C. Penney has been teetering on the edge for years.
On the bright side, this pandemic will come to an end sooner or later. What will that mean for the retailers who make it through? Though nobody has a crystal ball, we can take an educated guess at what’s next for retailers. Unsurprisingly, Curbside Pick-up and e-commerce leads the way.
Innovations That Are Here to Stay
At the top of the list of popular retail innovations may be Curbside Pickup. This wildly popular program has grown more than 700% at Target in the last quarter. Best Buy reports that 41% of their $5 billion in online revenue in the last quarter has come from Curbside Pickup. Retailers that do Curbside well—Target, Walmart, Best Buy, and Dick’s Sporting Goods are prime examples—are certainly well-positioned for a post-pandemic retail universe where shoppers continue to take advantage of Curbside Pickup and seamless e-commerce experiences.
Dollar Stores Rack Up Sales
Another winner during the Pandemic are Dollar Stores. They traditionally do well in tough economic times, and this certainly has been no exception. Dollar Tree has just hired over 25,000 new employees nationwide as it staffs up for the busy holiday season. There’s a lot of reason for optimism for Dollar Tree as their second quarter numbers for the 2020 fiscal year are quite strong. Consolidated net sales increased 9.4% to $6.28 billion. Gross profit increased 16.2% compared to Q2 of 2019.
As Dollar Tree President and CEO Mike Witynsi said, “Our store and distribution center teams have done a remarkable job of serving customers through an incredibly dynamic time in retail. Their continual efforts to ensure we are providing a clean, safe shopping experience, along with the great value and convenience our stores offer, contributed to our solid operating performance for the quarter.”
In addition to Dollar Stores, other retailing categories are doing quite well during the pandemic.
Some Retailers and Categories Are Thriving
Many of the retailers that are doing well are the ones you’d expect to thrive when people are stuck at home for an extended period of time.
- At Home. Although long-troubled Pier 1 has gone, other home furnishing stores and e-commerce sites are performing well. At Home, the “Home Décor Superstore” is planning to expand massively, from 219 current locations to as many as 600 nationwide. Home Depot, Lowe’s and other DIY superstores have been doing well. It makes sense—when people are stuck home, they have plenty of time to fix things up.
- Tractor Supply. Virtually unknown in urban areas, Tractor Supply is the largest rural lifestyle retailer in America, and they are growing fast. It recently opened 18 new locations, and is planning to open up to 80 more, bringing their total to close to 2,000 locations. As many city-dwellers are fleeing to quieter spaces to avoid COVID, retailers like Tractors Supply are reaping the benefits.
- Ulta Beauty. Maybe it’s all those Zoom calls, or the makeup youtubers out there, but Beauty giant Ulta Beauty plans to open at least 30 new locations in the next year, bringing their total to over 1,500. They also have a robust e-commerce business, which grew over 200% during the 2nd quarter of 2020.
The Way Forward: More Options and Better Fulfillment
Regardless of when the pandemic ends, it’s clear that the future of retail combines convenience and a better customer experience—ideally one that seamlessly melds online with in-store. A key word here is omnichannel. Retailers are going to need a robust online presence that facilitates e-commerce. That means:
- Drive traffic to digital assets. A better digital experience can offset the lack of foot traffic in stores during the pandemic. This is more than just a nice-looking website. For big retailers, it means your own branded app where customers can quickly place orders for home delivery or Curbside Pick-up.
- Keep your customers safe. Providing a safer in-store experience is absolutely critical. Consider devoting team members to wiping down shopping carts, providing plenty of hand sanitizer stations, and enforcing social distancing guidelines and masks—particularly as the temperature drops and we face another spike in COVID cases.
- Focus on fulfillment. An interesting trend that has recently developed is the rise of “dark stores.” Dark stores are former retail spaces that focus solely on online orders. It is just in the earliest stages, but it portends to be a major trend going forward. It allows brands to focus more resources on fulfillment, enabling faster delivery.
What are your thoughts? What have your customers been telling you? Have you noticed any changes in customer behavior? Let us know…we want to hear from you!