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Shopping and consumer spending in the how much cash and other liquid assets the
BUSINESS
Experts Update Advice for
Navigating the Pandemic
OBuilding on lessons from
a year gone awry, retail
consultants recommend the
best path forward.
BY KELLIE ELL
When the coronavirus made its
way around the globe last year, words
like “unprecedented” became instant
buzzwords. No one knew what to do.
Nonessential stores were forced to close,
millions of workers had to set-up home
offices overnight and online shopping was
put to the test.
Crisis managers and retail consultants
were quickly called upon for advice.
But without a blueprint, even the most
seasoned experts were using a mix of their
experience and best judgment to navigate
the path forward.
“If you look back a year ago, all of the
world was more or less divided into two
parts, with the essential retailers versus
the non-essential retailers,” Craig Johnson,
founder of Customer Growth Partners,
told WWD. “Everybody had challenges,
but the challenges were different for
different players.”
What was critically important for
everyone in those days was preserving the
health of the business while keeping both
employees and customers safe. To do that,
retailers had to focus on the immediate.
And with landmark events unfolding on
almost a daily basis, planning for the long-
term proved fruitless.
A year later, with consumers mostly
assimilated to the remote world, vaccines
have begun to roll out around the globe,
prompting a renewed sense of hope. Still,
the knowledge gained from a year gone
awry cannot be overlooked.
WWD caught up with a few experts to
find out what they’ve learned during a
year of lockdown, what tips they have for
retailers moving forward and what will
likely be the pandemic’s lasting legacy in
the world of retail and fashion.
FLEXIBLE SUPPLY CHAIN
One of the biggest problems at the
start of the pandemic was the surge in
e-commerce. While online shopping has
steadily been increasing its penetration
each year, the sudden need for social
distancing and store closures meant
many people who were still reluctant
to try online shopping suddenly
became converts.
But problems arose when there were
too many orders to fill at once. In fact,
a massive shift to e-commerce didn’t
translate to increased profits — even for
the biggest firms. Target Corp., which was
deemed an essential retailer and therefore
allowed to stay open throughout the
pandemic, fell short on bottom-line profits
last spring, proving the sudden surge
online was expensive.
The big-box retailer was able to iron
out the wrinkles. But smaller companies
— with fewer resources — might have a
harder time keeping up.
Johnson said the key is in having a
flexible supply chain, with fulfillment
centers in multiple locations.
“People have been diversifying out of
China — not exiting China, but reducing
their dependency on China — for a
good six or seven years now,” Johnson
said. “Instead of relying on China, or
Bangladesh, for some place that needs a
21-week lead time, find sources that can
get products to you in 10 weeks. You want
to have sources that are both different
from China and much more responsive
and closer than China, so you can tap into
new supply chains and new products on a
quicker basis than waiting for something to
sail across the Pacific.”
Fostering relationships with a wide
range of manufacturers and vendors will
come in handy on a rainy day, he added.
“The idea is to have this flexibility and
resilience in place,” Johnson said. “That’s
sort of the key factor.”
Amazon has mastered this model.
But lately, retailers such as Target and
American Eagle Outfitters have been
era of the coronavirus takes on a new look.
implementing the same strategies.
Both firms have successfully leveraged
regional distribution centers to help fill
e-commerce orders during the pandemic.
The result is better inventory levels,
less promotional activity and reduced
shipping costs.
“The idea is to have
this flexibility and
resilience in place.
That’s sort of the
key factor.”
CRAIG JOHNSON,
CUSTOMER GROWTH PARTNERS
CASH IS STILL KING
Last year, after stores were forced to
close down to prevent the spread of the
coronavirus, thereby eliminating in-person
revenue streams — at least temporarily —
experts said retailers needed to have their
finances in order. Number one: find out
MARCH 23, 2021
company had in reserve.
Much like a consumer checking his or
her bank statement to determine available
funds, retailers needed to know how
much cash they had at their disposal.
Many companies took out revolving credit
lines — sort of like an emergency credit
card — to secure additional lines of credit.
Others tried to negotiate rent abatements
or deferrals. Unnecessary expenses were
eliminated (furloughs, layoffs, reductions
in compensation and decreased capital
spending were a few strategies.)
“There was a hunt for ready cash,”
said Johnson, adding that the same
action plan should be considered moving
forward. “You want to maximize your
cash position.”
Daniel Binder, a partner at Columbus
Consulting, a retail advisory firm, added
that cash and asset management includes
having control over inventory levels to
align with current sales forecasts.
“Buying more than you need — that you
can’t sell — is just mismanagement of cash
and, of course, puts your business at risk,”
Binder said. “In this world of retail, clearly
there’s so much change and you really
need to ensure that you have enough cash
on hand to ensure that you are always fine
tuning your technological infrastructure
investments. Because, as things change,
you have to be back or ahead of it.”
CONTINUE INNOVATING AND
UPGRADING BUSINESS
Similar to having enough available cash,
Binder said one thing his firm learned
during the pandemic is the need for
continued investments.
“Companies need a robust amount of
investment to ensure that their businesses
are moving ahead,” he said. That
could come in the form of technology,
merchandise and design, or physical
locations, among other things.
Macy’s is just one of many retailers to
enhance its curbside pickup options amid
the pandemic.
Target, Walmart and TJX are just a
few retailers on board with this. All have
committed to investing millions of dollars
into their supply chains, stores and
workforce over the next few years.
“You have to upgrade a lot,” said Gerald
Storch, chief executive officer of Storch
Advisors, a retail advisory firm, debunking
the notion from the bears on Wall Street
that too many investments too fast is risky.
Earlier this month, after Target revealed
it would invest $4 billion annually to
continue upgrading its ecosystem, the
company’s stock immediately fell. Some
critics thought the retailer was setting itself
up to fail with overly ambitious plans for
the future. (The stock reversed course the
following week.)
But Storch said those same investor
fears can be used to remind retailers
what they should not be doing —
namely, skimping on investments. ►
Photographs by AP
Macy’s is just one of many retailers
to enhance its curbside pickup
options amid the pandemic.
 MARCH 23, 2021
“Target has always had a clean and
inviting store environment. And what can
be better during the pandemic? But that
costs money,” said Storch, who formerly
served as vice chairman of Target. He’s
also the mastermind behind target.com.
“They have to keep renovating the stores
on a much more frequent basis than the
competition, keep building brick-and-
mortar, or keep renovating their [existing]
brick-and-mortar in order to succeed,” he
continued. “And, of course, they need to
invest in e-commerce. Those are exactly
the investments that brought them the
great success that they’ve had lately. I
think it’s very short-sighted to think that
they should just milk it now and refuse to
make those [future] investments.”
HAVE A NEW — UPDATED —
RECOVERY PLAN IN PLACE
The pandemic isn’t over. And even as
vaccines roll out around the world — and
a new sense of optimism is instilled into
consumers everywhere — retailers need to
be aware that disasters still happen.
And that advice isn’t just for
pandemic-related emergencies. Retailers
need to prepare for all kinds of crisis
events, from riots to store closures to the
power outages, like the situation in Texas
this year.
“In a situation as severe as this, hope
is not a strategy,” said Johnson, stressing
the need to always have a plan of action
on hand. “You want to have an emergency
plan, or a crisis plan, that sits there on the
shelf that you can test out once a year and
update. The plan should lay out ‘here’s
our temporary organizational structure as
we get through this, here’s who’s going to
be in charge of what, here’s the things we
need to do,’ whether it’s communications,
whether it’s consumer, employees,
vendors and so forth.”
ESTABLISH LONG-TERM GOALS
A year ago, experts advised retailers to
focus on the near-term. The advice made
sense — at the time. The whole world
was navigating a situation that had never
occurred before. Trying to plan out events
or scenarios a year in the future was
hardly a practical approach.
But 12 months later, playing the long
game, while still having one eye looking at
the present, may be a better strategy.
“Obviously, a lot of your attention is
going to be focused on the immediate
here and now,” Johnson said, “but you
also want to make sure that you don’t do
anything stupid that imperils your long-
term strategy.”
Part of a company’s growth, Binder
said, is understanding the customer
journey and where he or she is going,
whether that’s online, in stores or
somewhere in between.
“It’s no longer just going to your own
e-commerce site or visiting your store,”
he explained. “It’s really understanding
all the different touch points that the
customer is engaged with. Your plan
needs to accommodate that.”
Equally important for growth is using
the downturn in the market to secure
your position in the greater retail
landscape. That could come in the form
of negotiating real estate lease deals,
or for bigger companies to seek out
opportunities to acquire smaller brands.
Morris Goldfarb said G-III Apparel
Group is taking advantage of the current
climate to maximize his firm. American
Eagle Outfitters’ Jay Schottenstein hinted
at the same.
“When everyone else is running for
the exits and there’s a recession, the
Photograph by AP
smartest companies will basically use
that opportunity to build market share,”
Johnson said. “The advantage of doing
that when you’re in a downturn, you can
build market share much more cheaply
Some apparel stores are
experimenting with automated
checkout machines.
from an advertising and marketing and
investment point of view, much more
cheaply during downtime, than during up
times. So there’s much less cost involved
over each share point that you gain during
a recession.”
Another long-term strategy is to stay
connected with consumers in ways that
both make life easier for them while
setting them up to be lifelong loyal fans of
the brand.
“You do want to maintain continuity,”
Johnson said. “Ideally, you want to find
things that you’re doing in the short-term
that help your customers, but that will
“As retailers, we have
to serve the customer
from wherever they
are. And they’re
everywhere. They’re at
home; they’re online.
They’re in store.”
DANIEL BINDER,
COLUMBUS CONSULTING
also build loyalty and retention for those
customers when the good times return.
You want to help them out, be a solution
for them.”
Retailers can stay connected by way of
social media, through clienteling services
or by helping shoppers migrate online, if
they’re not already.
Binder said text messaging will likely be
more widely used between retailers and
consumers in the future.
“Customers see that much more
efficiently than waiting for an email,” he
said. “They’re embracing that today and
it will play a bigger role [in retail] in the
future. And it’s not inhibiting sales. It’s
actually helping sales in a lot of cases.
“And it’s certainly bringing speed
to the selling process,” Binder said.
“Go-forward, those things will be critically
important. All of that changes what
conversion and average basket [size] look
like. And that’s all growth ahead that has
to be planned for and considered in one
strategic plan.”
He added that companies should also
consider new ways for store employees
to connect directly with shoppers, both
in real life and online, becoming not just
sales associates, but brand ambassadors
as well.
“It’s driving as much traffic as possible
to your site and leveraging your physical
store as much as possible to be part
of that ecosystem,” he said. “And it’s
really about ensuring at the same time
that you’re strengthening that personal
connection with the customer, from a
loyalty standpoint. So it’s really bringing
that offline, online experience together.”
But Johnson warned, retailers need to
steer clear of becoming a nuisance.
“Nobody likes getting another spam
email every day from whatever company,”
he explained. “The old motto is, never
make it hard for a customer to give you
their money, whether it’s in-store or
online or a hybrid, like curbside click and
collect. You want to make it a painless,
quick process that saves them time and
eases the hassle factor while getting
whatever products they’re trying to buy.”
Ultimately, Storch said the most
important element in a retailer’s
go-forward strategy will be to make sure
it offers something that the competition
does not.
“But that doesn’t mean you’re going
to win,” he added. “You have to have
an economic model that makes sense to
you and you have to have a sustainable
competitive advantage. Ask yourself,
‘How can you beat the competitor?
And why would someone choose you?’
And that’s the whole problem with the
department stores, [for example].
The customer doesn’t want to shop
there anymore.”
LASTING LEGACY
COVID-19 disrupted nearly every
industry. In the retail world, the lasting
legacy will include a continued need
for hygiene (think hand sanitizers and
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contactless payments in stores long after
the pandemic is over). But there are other
permanent changes.
Distanced shopping options, such
as clienteling services and curbside
pickups, will be used not just as defense
mechanisms against the coronavirus, but
simply because they’re convenient for
time-strapped consumers.
Online shopping will continue to grow.
(Overall, online shopping makes up about
22 percent of total retail sales, according
to Johnson. But he said the numbers will
continue to grow by about 1 percent a year.)
And those numbers stand to grow both
online and offline with the recent round of
stimulus checks and federal tax returns.
“Going forward, the American consumer
is very resilient,” Johnson said. “People
pulled back a little bit on their spending
[during the pandemic]. But they still spent.”
One caveat is minimum wage increases
to $15 an hour at some companies. While
more money in consumers’ pockets
might seemingly provide a boost for
the economy, increased labor costs will
likely result in more retailers opting
for automated self-checkout machines,
Johnson said.
Some apparel stores are experimenting
with automated checkout machines.
Target, Walmart and Costco already
have them. So do some Urban Outfitters
and Five Below stores. This will
undoubtedly cut into retail jobs in
the future.
“There’s going to be more and more
of that going forward, including in some
places that you might not expect it,”
Johnson said. “You still need human beings
in stores. But you’re able to operate your
store with more efficiency with [some]
automated self-service from a labor staffing
point of view.”
In addition, Binder said the pandemic
reemphasized the importance of the
omnichannel model.
“As retailers, we have to serve the
customer from wherever they are,” he
said. “And they’re everywhere. They’re
at home; they’re online. They’re in store.
They might be in their offices or in their
cars. They’re on social media. They are in
marketplaces. That’s just the reality.” ■
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