Fourth quarter is here. In the world of retail, this make or break. It’s the time to compensate for poor results by forging through with a solid consumer-centric strategy, conviction and a lot of clever marketing. Your customers become more important than ever and you count on every single sale to make your yearly numbers. But what happens when a black swan event, the likes of which we haven’t seen for over 100 years, descends upon the entire world? Does this mean fourth quarter no longer counts? Do we all stop and wait for this to pass while holding on for our dear lives?
Although the pandemic has had widely detrimental effects on nonessential retail and our overall economy, I believe retail will see positive gains in the later part of the year. It might not be like anything we had planned, but as Sun Tzu said, “Opportunity lies in the midst of chaos.” Given that chaos has been the theme of 2020, I’m confident that new opportunities are afoot. Here are my reasons for predicting a productive holiday season.
Life is Meant to Be Lived, Not Survived
COVID fatigue, a new phrase with a lot of layers to unpack, simply means that we’re all tired of worrying about what is, and what is to come. People are ready to live again, and though that may not mean holiday parties on repeat, jetting away to beach vacations or a cabin in the mountains, it does mean that everyone is looking to make memories at home with their families.
Making up for a dismal eight-month period by finding the magic during the holidays is on many peoples’ lists. Whether it’s decorating their home with a new level of excitement and detail; spoiling their loved ones a little bit more; or investing in pieces and items with a longer life cycle (as sustainability continues to be in the forefront of many consumers’ minds), everyone is seeking their bliss. Of course, it goes without saying that not all retail categories will benefit during these new times. Categories like apparel will still be challenged as work-from-home is part of the new normal; however, categories such as home goods, athleisure, fitness and athletics, electronics, gifting, personal care, intimate apparel, loungewear, arts and crafts, household essentials, health, some subscription business models, and value-driven retailers (e.g., T.J. Maxx, Dollar Store, etc.) will all fair well.
Brick-and-Mortar-Focused Shoppers Unite
Even as online retail grows and expands, brick-and-mortar is still alive and well. Though foot traffic has slowed exponentially, the shoppers who make the trip to a physical store are more focused and intentional in their purchasing decisions. They’ve done their research, know what they want, and are ready to get in and out quickly. What that means for retailers is higher conversion rates and larger basket sizes, all of which can be facilitated by delivering a more targeted shopping experience. That can be through apps that tell a customer the exact location of the item they seek to purchase, the current promotions going on, or simply providing a frictionless and contactless payment process.
Grounded, But Not Punished
Being grounded with cancelled travel plans means that customers want to satisfy their need for adventure and memories through different means. During these times, meeting the customer at the intersection of safety and convenience is crucial. Online shopping has surged — the equivalent traction of 10 years happened in eight weeks, according to McKinsey research — and the home has been refashioned as the new entertainment venue. It’s up to brands and retailers to adapt to new consumer preferences and focus on how to continuously improve their strategies to surprise and satisfy their guests.
Back to Basics
The playbook for retailers during a recession, with its ebbs and flows, is to get back to the basics and essentials. What does that mean during these times? More localized shipping experiences, moving forward with health and safety in mind, working toward a more connected community, and reinforcing your strengths. Show the customer why they chose you in the first place and why they should continue to support your business. Whether it’s value, loyalty, variety or experience, going back to the core of why your business exists is important and necessary.
In conclusion, there’s no magic solution or surefire path forward; however, as I read and listen to expert opinions, I tend to skew towards a more positive outlook. Have consumer behaviors changed? YES. But is retail doomed? Absolutely NOT. I’ve seen many brick-and-mortar stores reopen with some basic changes in the last couple of months and these businesses are picking up. It may not be the majority, but it’s an indication that we will go back to our ways. Maybe not 100 percent, and maybe not right away, but ultimately as humans we are social beings. We seek camaraderie, experiences and socialization.
Retailers should also consider positioning themselves for an economic snapback as pent up demand suffuses the economy. This should be tempered with a full understanding that even as this virus fades, some of our new learned behaviors will continue. The winners will be those that understand, accept and capitalize on this fact. In due time, and our own time, life will return to a new and, dare I say, better normal. As always, tough times never last, but tough businesses do.