Is now a good time to launch a retail startup?

Photo: Getty Images/martin-dm
Aug 04, 2020
Tom Ryan

Pundits regularly hail the benefits of starting a business during a downturn and many are now claiming it’s just as true during a pandemic.

Fortunately for entrepreneurs, a recession is already underway that may last until a vaccine for COVID-19 is found and distributed.

The often-told benefits of starting a business during a downturn include less competition, access to a wider pool of talent and cost savings on everything from financing to construction, rent and hires. Publicity is also easier to find as news outlets are hungry for feel-good stories.

Many also believe innovation is stoked because the challenges driving the hard times present opportunities to provide solutions.

Wrote Heidi Zak, co-founder and co-CEO, Thirdlove, the online bra upstart, in an article for INC., “If anything, global crises are what highlight the next generation of problems the world needs to solve to move forward — which gives rise to dozens and dozens of new companies, new markets, and new industries.”

On the downside, the pandemic packs a high level of uncertainty and is causing radical life alterations, from remote working to social distancing protocols. Linda Darragh, executive director of Kellogg Innovation and Entrepreneurship Initiative, said in a recent webinar from Kellogg Executive Education, that it’s important for new ventures to address changes in long-term behaviors over short-term shifts.

She said, “A crisis creates a change of behavior, which generates new opportunities.”

In a Q&A on Auburn University’s website, Franz Lohrke, professor of management at the university’s Harbert College of Business, said entrepreneurs can “always take calculated risks and, if they successfully tap into an important, enduring customer need, they can be extremely successful.”

Yet potential customers will be spending cautiously with the pandemic’s many unknowns. Prof. Lohrke added, “Even during a strong economy, startups need support from several sources, including customers willing to spend money, employees ready to work, and, in many cases, organizations prepared to fund the business. During the pandemic, these challenges have become magnified.”

DISCUSSION QUESTIONS: What are the pros and cons of starting a business during a pandemic? What’s your advice for entrepreneurs looking to start a new retail or consumer brand at this point in time?

Please practice The RetailWire Golden Rule when submitting your comments.
"The pro is that if you succeed it will only get easier as things improve. The cons are just about everything else. "
"The future is still very much murky, and nimble business plans with low fixed costs will be the ones to come out ahead."
"As always the very sad times are often the very exciting times so let’s see what springs from the ashes."

Join the Discussion!

22 Comments on "Is now a good time to launch a retail startup?"

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David Naumann

While it is true that there are some pros to starting a new retail startup during the pandemic, the cons are much more concerning. As discussed, there are some advantages to starting a new retail concept today, as rent is easier to find at bargain rates and talent is more available, but with so many people on unemployment or still working at reduced wages as a result of the pandemic, discretionary spending is low and many people are avoiding physical stores. That said, if you have a new product that has high demand, especially during the pandemic, and it is conducive to selling online, it is a great time to start a new retail concept online.

Bob Phibbs

Startup or legacy, you either believe coronavirus is happening TO you and shrink or say it is happening FOR you and step into it to make it work. Have a passion, commit to the long hours, find a way. If not, watch others take your idea and run with it.

And as for the leadership in retail who are cowering, you too need to step up. Consumers are on pause but when we push play – and we will – you better be ready. With roughly 25 percent to 30 percent of your competitors bankrupt and closing, the time has never been better to get your act together.

Shep Hyken

Frank Sinatra sang a line in the song “New York” that went: “If I can make it there, I’ll make it anywhere…” If someone has a concept that can be launched in the middle of a pandemic that’s not about products and services tied directly to the pandemic, then they may be successful when times return back to normal. The key is to find the product or service that worked during non-COVID-19 times and have a successful launch. What product is that? Well, that’s for the entrepreneurs to figure out!

Joel Goldstein

There’s not going to be a better time over the next year to two years to buy great real estate. The prices may not be rock bottom, however as they say in real estate it’s all about location. A lot of the Main Street stores on corners are becoming available and when they are gone it’s likely they will not be available again anytime soon.

Ken Morris

Retail is forever altered by this pandemic. Entrepreneurs need to seize the opportunity by shifting the customer journey to match the go-forward model. A great example of this is Wawa’s drive through convenience store. The dark stores concept and ghost kitchens are great examples of this pandemic driven customer journey response. The speed of the pivot is critical as those that move quickly will reap the rewards.

Richard Hernandez

I do not know of any pros at this time to starting a business but there are a lot of cons. The unknowns surrounding city/country/state ordinances and the uncertainty of the customer base about visiting your business on a consistent basis would be red flags for ensuring the business is successful. A big risk indeed – tread lightly.

Jeff Weidauer

The pro is that if you succeed it will only get easier as things improve. The cons are just about everything else. While there is tremendous opportunity, it’s not for the faint of heart.

Neil Saunders

There is enormous disruption and distress in retail right now. However the churn is also creating a lot of opportunities as consumers shift their shopping patterns and behaviors. Any startup that is alert to those opportunities has a chance to succeed and grab some market share. Sure, the market is complicated and changeable but to a certain extent it always is. As such, anyone waiting for the “right time” to launch something new will never launch it!

Gene Detroyer

If you have a NEW, innovative concept, plenty of cash to last for two or three years and are willing to work 24/7, now is a great time.

This time of disruption should generate many new and innovative ideas. If you want to take retail (offering products and services to customers) you may have a winner. If you want to start a business that is the “same ol'” save your money and energy.

Brandon Rael

Historically, out of global disruptions, pandemics, and times of uncertainty comes an impressive amount of creativity, passion, and innovation. While there is certainly a high level of risk for any startup in a stable economy, now it’s even more uncertain with the pandemic and all the associated unknowns.

The Great Acceleration driven by COVID-19 has sparked the innovation engines, as mankind looks for ways to evolve, adapt, keep safe, healthy, and succeed in whatever our new normal evolves into. Some of the most world-renowned digital-first businesses came out of the ashes of 2008’s financial collapse, including Uber, Venmo, WhatsApp, Square, etc, that emerged to meet the needs of the changing consumer behaviors.

With the digital-first mindset more prominent than ever, we should expect a similar rush of creativity and innovation to come out of this pandemic, even with all the risks.

Kathleen Fischer

There may be some pros to starting certain types of businesses right now – especially if they directly relate to current consumer needs and habits – but it certainly seems like now would be a very stressful and challenging time to start a business.

Andrew Blatherwick
Most people would say an entrepreneur is mad if they start up a new retail organization at this time. Some would say that entrepreneurs are mad anyway so there’s nothing to lose. However it is at times like these that people come up with amazing new ideas of how to go to market and address customer needs or wants. Entrepreneurs are great at coming up with innovative new ideas that then looks so obvious. Yes customers are cautious at the moment about spending money but they have also proved since stores were opened up again that they will spend money when they think it is justified. Earlier this week Tractor Supply showed what can be done. This is not a blanket “all retailers are failing” story – there are successes out there. Some of the old tired and possibly lazy retailers will go to the wall which open opportunities for new players, lower rents, good people looking for jobs and supply chain costs that are now lower than at other times. There will be new… Read more »
Evan Snively

If your business plan is the exact same as it was in January of 2020, you are doing it wrong. The advantages that come along with launching a business in a pandemic are not 1:1 as launching in a downturn. For starters, make sure your business is not reliant on “picking up” by a set date in order for solvency. The future is still very much murky, and nimble business plans with low fixed costs will be the ones to come out ahead.

Mel Kleiman

Now is a great time to get into any business that can serve customer demand. Now is not a great time to get into a me-to retail type operation. If you have a product that customers want and need go for it. I would also look at building your brand online and not having a brick-and-mortar store.

Ralph Jacobson

As with any launch, ensure the long-term success by avoiding jumping on a short-term opportunity. If your product or service is not sustainable beyond the pandemic, or if it is easily copied, rethink your plan.

Mark Price
There are many advantages to starting a business during the pandemic. First of all, things will never again be as difficult as they are right now, so a company can look forward to a positive upswing in their business as vaccines start to become available. The other advantages mentioned in the article include opportunities to lock in low cost rent and to secure staff resources at at a favorable rate. In addition, consumers are hyper aware of which companies message in a way that is consistent with their lived experience during the pandemic, and a start up has the ability to tune their message more tightly than an existing company, given the lack of fixed and sunk capital. For a startup to succeed today, not only must the brand and the products be finally tuned to specific segments of consumer needs, but the company must operate on a lean and agile approach, pivoting based on consumer feedback in terms of transactions and social input. As someone who started a company during the .com bust of… Read more »
Perry Kramer

The biggest advantage often seen for new businesses during this pandemic is the ability to start without the overhead, legacy systems and processes, and inventory that are holding back many of their would-be competitors. Foundational to this advantage, in addition to this lack of the costs associated with the legacy investments/costs, is AGILITY. New businesses with new approaches, and their supporting technologies, are going to be able to adapt faster to the changing business, demographic, and cultural changes which are all going to evolve as we emerge from the pandemic and have no clear vision to what the customer experience will look like in the next two years. Additionally, this agility will allow new businesses to influence what the next version of the customer experience will look like.

Kenneth Leung

With uncertainty comes opportunities. There is definitely a lot of downside to starting anything right now, but if you have a product that consumers need during the downturn, you may find costs a little lower with talent and IT infrastructure. Also as other companies downsize certain assets maybe available in secondary and liquidation markets. If the business model and capitalization is on point, there is no good or bad time to launch.

Brian Numainville

Much depends on exactly what business you are trying to start during this time. Is it online? Is it a high demand product right now? How might it evolve as this pandemic continues or when it eventually tails off? Although it might not be a good time to start for some, for others there might never be a better time.

Jeff Sward

I think a big pro to jumping in now is that the current market has shone a very bright light onto all the strategies and tactics that simply won’t work anymore. “Good enough” a short while ago won’t cut it now. Ramp up to a newer/better level of execution or know that the odds are dismal. And that increased level of clarity is a good thing. There isn’t any false sense of safety in this market. And if your idea looked good a short while ago and is now seen to be failing, the market is now giving you a head start on adapting to the new rules.

Casey Craig

Businesses that are responding to a market need or unfilled niche are likely to do well, regardless of the current economic climate. Any product or service a business offers must solve for consumer needs, not simply be a “cool” or sophisticated idea. The best way to determine this is to minimize time to value–get the product out there in the market and get real feedback, instead of tinkering with it pre-launch for months or years. With that in mind, it’s also important for any business to establish a strong digital strategy when starting out. This is especially true right now. All businesses are digital businesses, whether they like it or not. If you don’t have a digital presence in today’s world, you are facing an uphill battle.

Charlotte Kula-Przezwanski

There are always pros and cons to starting new businesses and even more so during a pandemic. I agree with the discussion points that retail space could be cheaper now but also now more than ever; consumers have got more used to shopping on the internet and so the power of the internet for start ups is even greater. Columbus have been working with a start up in the Hair Care area and this is a great time to launch. It’s all about creating great products, reaching your audience and providing exceptional service. You have to surprise and delight and then use the feedback to create loyalty and new customers.

"The pro is that if you succeed it will only get easier as things improve. The cons are just about everything else. "
"The future is still very much murky, and nimble business plans with low fixed costs will be the ones to come out ahead."
"As always the very sad times are often the very exciting times so let’s see what springs from the ashes."

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