The coronavirus will accelerate retail’s ‘collapse of the middle’
Through a special arrangement, presented here for discussion, is a summary of Steve Dennis’ recent Forbes article. Steve is President & Founder of SageBerry Consulting and a senior Forbes Contributor. His first book — Remarkable Retail: How to Win and Keep Customers in the Age of Digital Disruption — will be published on April 14th.
For retailers struggling with failing consumer value propositions, the coronavirus pandemic could not have struck at a worse time. Just as many are running out of meaningful cost reduction moves and are in desperate need of cash from profitable top-line growth to invest in more than a timid transformation, much of physical retail is now grinding to a halt of difficult-to-determine depth and duration.
For highly leveraged retailers, prospects for near-term recapitalization appear bleak. For any retailer that sells fashion-sensitive or seasonal merchandise, each week of declining traffic adds to the pile of coming markdowns.
Dramatically shifting consumer demands combined with the broad availability of many shopping conveniences that were once scarce — product information, product choice, distribution access and more — have laid bare the weaknesses of many once-powerful and iconic retailers. Good enough no longer is. We have to choose remarkable.
This bifurcation of retail — this widening gap between the industry’s haves and have-nots — has been occurring for years. During the past decade, in particular, success has mostly been found at either end of a spectrum. At one end — despite claims of a retail apocalypse — retailers offering remarkable value in product and convenience have been growing sales, profits and store counts. At the more premium and experiential end, plenty of specialty and high-end stores are experiencing considerable success. Poor or stagnant financial results, bankruptcies and mass store closings are largely concentrated among those trapped in the mediocre middle.
In my new book, “Remarkable Retail: How to Win & Keep Customers in the Age of Digital Disruption,” I write, “The power the consumer holds will not allow many just-good-enough retailers to sustain market share, much less ever achieve adequate financial returns.”
As I wrote that sentence last fall, a possible recession was very much top of mind, but a pandemic was certainly not.
Beyond the as-yet-unwritten story of the ravages of this outbreak and the magnitude of its tragic human toll, the spread of the coronavirus seems certain to accelerate the collapse of the Middle and push many other weak retailers (and the industries that serve them) over the edge.
- The Coronavirus Will Accelerate Retail’s ‘Collapse Of The Middle’ – Forbes
- Remarkable Retail – How To Win And Keep Customers In The Age Of Digital Disruption – Steve Dennis
DISCUSSION QUESTIONS: Do you see the coronavirus fallout driving many department stores and other mid-tier retailers out of business? Which retailers serving the middle appear best positioned to survive?