PERSPECTIVES

We once knew a lady who steadfastly championed the idea that Labor Day should be considered New Year's Eve, and the Tuesday after Labor Day as the start of the New Year. (Yes, she was ahead of her time in many other ways as well.)

Here's her reasoning about the "real" New Year's Eve: as summer fades away and vacations end, the new school year starts up; the baseball season pennant race is on; football games begin. 

As all this happens, she explained, most people take on a renewed sense of energy. 

The promise of a fresh start is everywhere. Optimism abounds!

Take A Minute. Check Out These Two Charts. What Do You See?

This shows the average annual pre-tax income (in 2022) and average expenditures, for US total, and by generation.

 

And this chart shows total US population by generation, by age in 2022.

You may be looking at the future of retailing

Granted, everyone in retailing who looks at these two charts from the Collage Group* will conclude something different. Didn’t you?!

Bold Way To Improve Productivity 

As we look around, we see a popular cost-saving and productivity-boosting tactic being instituted by many national retailers, shopping malls, and restaurants. They are open fewer hours. 

This offers an opportunity for you to revisit your store hours and employee scheduling practices. Maybe it's time to consider some changes, if you haven't already. 

Your customers have voted with their feet. Your goal is to see what patterns there are in their shopping visits. (This could be a fine project for a summer employee home from college.)

Start small; focus on , say, the last four weeks of data collected by your POS system. But this time, produce reports by the day of the week. Yep, seven columns of data. Wait till you see what it can reveal!

We've been wondering...

What's the #1 thing that the retail industry needs now more than anything else?

More towns. 

That's right, more towns and villages. Look, towns tend to be more residential, even slower and more relaxed. 

Even the word conjures up warmth. 

And towns, and the people who love towns, are a mecca for the vibrancy of retailing. Think about it: the retail industry needs more towns!

And it's already trending in that direction. Macys, Whole Foods, Nordstrom Rack, and Walmart have announced rolling out small formats, seeking locations closer to residential areas. They recognize that's where their customers are and will prefer to be. 

Conversely, there are way too many cities. 

Undoubtedly you'll agree with this. We read and hear a lot in the business press, but we treat 100% of it rather skeptically. 

And so it is with articles and commentary about this coming Holiday Season, specifically about retailers' inventory and margins.

Nevertheless, there is considerable good news being trumpeted. Most recently, this feature article in the Wall Street Journal: "Retailers Hone  Inventory for Holidays" *

"In-Person Shopping Keeps Getting Worse"

That was the headline in a recent business page editorial*. And the writer was able to cite chapter and verse of all-too-prevalent lousy shopping experiences for customers. 

• "More American stores are doing with fewer employees and many have locked items up to keep them from being pilfered."
   
• "The retail industry slashed head count in 2020 and has never returned to pre-pandemic staffing levels."
   
• Meanwhile, "store employees are spending more time fulfilling online orders, leaving them less time for helping [in-store] customers."
   
• Then this warning: "Head-count reductions will become even more tempting in the quarters ahead, as the economy dampens consumers' appetite for shopping."

As noted by a Wharton School professor, "retailers frequently reduce headcount because 'you immediately see the savings in payroll but you don't necessarily know what damage that does to the top line.'" Of course, the retailers that professor is referencing are the Big Guys who have to satisfy their investors every quarter.

As independent retailers, you have advantages that are unavailable to the Big Guys.

Think about the prominent characteristics of today's shopping experience:

• More "self-service" for the customers (that is, less staff on the floor.)
• Self check-out by the customer.
• Reduced in-store merchandise selection; "Just check our website."
• Limited in-store signage or knowledgeable staff.
• Presumptions that customers will search online for product information, reviews, etc.
• Automated, "menu-driven" phone systems replacing "real people."  

Hmm.  

• Are these providing more "convenience" for shoppers?
• Improving their shopping experience?
• Or – just shifting the work to them?!

Convenience Retailer vs. Destination Retailer: Decision Time

Throughout the pandemic, millions of shoppers – including the older Baby Boomers – discovered the benefits of online shopping. Then, as brick-n-mortar retailers scrambled to survive, the increased availability of delivery, curbside pickup, BOPIS (Buy Online, Pickup In Store) and BORIS (Buy Online, Return In Store) was well received by a broad swath of consumers. 

We see that this has brought heightened awareness of two different retail strategies: Convenience Retailing versus Destination Retailing. 

And here's the deal: retailers now must choose either one or the other of those two strategies. You cannot have one foot on the dock and one foot in the boat. You DO have to decide! 

• That uncertain/undecided middle ground is not a viable choice. 
• Those who end up there by default – by choosing to not choose  are on their first step to being former retailers!