“I think for restaurants and the service industry, there is going to be a morbidly high business death rate. My fear is the restaurants that survive are going to be the big chains, and we’re going to eradicate the very eclectic mix that makes America and going out to eat so vibrant and great.” David Chang on the Restaurant Industry
The Retail Apocalypse has arrived, and a full total sudden disruption in the way people shop is officially here. We weren’t quite there in 2010, 2011, or even 2018. Stores have had declining sales and large chains may have shuttered - but this has been more of a slowdown than a total sudden apocalyptic death.
The true crisis started in 2019, where store closures jumped 60% from 2018 numbers. Some blame online shopping, others blame rising commercial rents, but the reason no longer matters. There's no going back.
Pandemic Retail is Here
2020 is here and it brought COVID-19 along, the worst-case scenario is officially a part of our grim reality.
Retailers are now reporting a 30% drop in sales. Over 110,000 restaurants have reported closing, and dine-in sales are down a whopping 90%.
Big retail is also on the brink of collapse. Macy’s is leveraging their real estate to help raise cash. Nordstrom has furloughed the majority of its workers, and suspended dividends. J.C. Penney is filing for bankruptcy.
There’s a complete and total disruption of all retail metrics. So what happens next? How does your business survive? Will your favorite restaurant stay open?
Great Things Come to Those Who Act
Enter the Internet, a parallel universe where online retailers are growing. Companies that focused on their e-commerce presence slowly shifted their customers online. Retailers that have built “e-commerce first” businesses are now driving unprecedented growth online. Didn’t expect cars to be sold online? During last year’s Singles Day in China, Alibaba reported selling 55 cars online in just 1 second. Thought customers would never embrace fashion online? BALR, an iconic fashion brand founded in 2013 grew its customer base, primarily online, and through pop up shops to over 10M euros in annual sales. Here’s the reality we now live in. If you’re a fashion brand, start getting used to customer returns and exchanges. If you’re a restaurant, get used to a live chat experience that matches a real-world service staff conversation. Last but not least, if you’re a product maker, double down on reaching your customers where they're actively spending hours of their time.
If you’re a retailer determined to have a physical brick and mortar store, you have to start thinking outside the box. The future is experiential retail that brings customers closer to your brand. Think pop up stores, Amazon Go, or the new Sweet Green concept that combines tasting with online shopping. The sole purpose of your retail store is now to help drive customers to your online platforms and build lifelong shoppers that order directly from you.