Navigating Retail’s New Normal: Lessons and Innovations from 2020

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Since you are reading this in the fourth quarter of 2020 you have managed to endure and survive the many obstacles thrown your way during this unprecedented year. Economic shutdowns riots and protests mask mandates social distancing requirements as well as freaked-out customers and concerned employees. What else can be added to the list that complicates an already challenging occupation right?

My my how things have changed

The financial ramifications of how to navigate these challenging times is surely a subject of focus as we close out this turbulent year and approach 2021 with hopes of “normalcy.”

Nowadays I often find myself longing for yesteryear. Step back in time for a moment to the golden days of retail. A time when merchants actually traveled to markets and trade shows to physically meet with vendors and colleagues to exchange ideas and buy merchandise for the upcoming season. A time when customers could enter your store and be greeted with a welcoming smile as opposed to being handed a mask lest they absent-mindedly entered minus a required face covering.

Returned merchandise was simply put back in stock and not subjected to mandatory quarantine and disinfection protocols. Yes back in the day marketing efforts were actually measured by how many customers could be enticed to shop the store during a given event or promotion. Imagine doing that today as retailers are told to restrict the number of customers entering for their safety as well as that of the employees.

Gone for now are the days when you entered a retail store and were offered a cup of coffee or a bottle of water. In 2020 those pleasantries have been replaced with hand sanitizer and masks. Whoever heard of curbside pickup prior to this year?

Believe it or not there was even a time when employees were financially better

Off to Work

Going to work rather than depending on unemployment and the weekly government bonuses that accompany it in many cases. I’ll admit to being a bit nostalgic but I miss the good old days of retail — 2019.

It’s Not All Bad

Though there are many horror stories to point to this year there are several positive things that we can take away as well. Many retailers have stretched and grown to find new ways to do business that may never have been considered.

Take for example the retailer who for whatever reason didn’t feel the need for a shopping cart on their website. Clearly without the ability to purchase online those retailers without such a vehicle were/are at a disadvantage.

What about the solidarity we witnessed as retailers vendors and landlords worked in unison as all recognized that they were all in this situation together? Let’s not forget our government whose quick response through the PPP forgivable loans and other lending programs brought much-needed relief to many.

We have also seen retailers become more introspective with regard to their largest asset — inventory. Some have been able to pick up new lines that perhaps they couldn’t carry previously. In most cases they have realized that “cash is king” is more than a clever slogan.

A good margin percentage is important but you can’t put a percentage in the bank. It doesn’t mean a thing if no one is buying. Retailers have discovered that less is more.

The 80/20 Rule is Still Alive and Well

Where do the majority of your sales really come from? More or less 80 percent of your sales come from 20 percent of your stock. Close to 20 percent of the vendors you carry supply 80 percent of the inventory you have.

If you take an honest look at your inventory position you will undoubtedly find pockets of stock (or vendors) that you just don’t…

need to carry. These areas overlooked for the most part when times are good should be identified and eliminated as they contribute little to overall profitability. Now is the perfect time to again evaluate all vendors based on GMROI contribution so that you have the data to make the right decisions.

Give Yourself A Pass This Year

Few would argue that the path to retail success would likely be revenue growth coupled with inventory turnover. This year however for reasons that are all too obvious top-line revenue growth is turning out to be a near impossibility for many.

It’s human nature to compare to previous periods and want to improve but this year is an outlier. In some cases where new goods never received the exposure that they should have for reasonable sell-through it may make sense to “hotel” them for next year. Clearly if done on a large-scale basis this will affect turnover just as liquidating new stock at drastic reductions has a profound effect on margin. You have to decide based on your own situation which is the best route for you.

Holiday Shopping 2020 Style

There are simply too many unknowns this year for anyone to be able to predict how Holiday shopping will be impacted. Suffice to say that the experience will be different from any other year for reasons previously discussed.

What you won’t see are smiling customers and sales associates and packed stores due to masking requirements and social distancing. What you might see are earlier shoppers and less discounting perhaps due to leaner inventory levels and delivery interruptions.

What you will see is an increase in online shopping. It is being widely reported that more stores will be closed on Thanksgiving which in my opinion is a good thing.

In such an unpredictable season prudence would dictate that keeping cash reserves plentiful and inventory levels lean would be the responsible thing to do.

Don’t be too hard on yourself.

Play the cards you are dealt the best that you can and move forward.

About the Author

Ritchie Sayner has spent the past four decades helping independent retailers improve sales profitability and cash flow. He can be reached through his website at www.advancedretailstrategies.com.

48 runninginsight.com © 2020 Diversified Communications

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It’s human nature to compare previous periods and want to improve. Don’t be too hard on yourself. Play the cards you are dealt the best that you can.

Ritchie Sayner

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