The Impact of CoVid on Retail- Some Future Salt in the Wound

Prior to the Pandemic that will change all of our lives, retailers had been getting by. They weren’t doing great by any means but they were okay. Sales and indeed, the economy itself, had been on a decline since the mid-2010s. Physical retailers were just not doing as well and many had been switching to or starting with a purely online sales model.

Now? This is something some of these retailers wished they had the chance to do. April and second quarter earnings are expected to be bleak for most retailers and large department stores. With stores closed for part of March and all of April, those figures aren’t going to keep stores afloat with so little traffic. Even digital retailers have seen a decline in sales figures as everyone braces for the long haul.

Indeed, there are talks of large retailers considering bankruptcy. Whole executive teams have been let go in one fell swoop of the pen. The reality is that retail may never be the same again. The salt on that wound is where online retailers like Amazon and even Walmart have seen an uptick or near explosion of sales figures.

Those who struggled with a more physical than digital approach to the customer experience pre-Covid discover that life straddling the fence has left them unprepared for this crisis. In reaction, emails about sales are hitting inboxes around the clock. Where before you might see a modest 25% in price reductions, we see fewer restrictions and 50% or more is a common sight. People are still buying, that hasn’t stopped but it’s slowed to a trickle. The lull in the economy, once robust, has taken a turn for the worst.

People who shop spend money, paying money they’ve earned, to stores which in turn pay suppliers, artisans, designers, and sales people. Those same people also go out with their salaries, to spend on things, which in turn promotes a moving economy. If no one is buying, no salaries are being paid, no goods are being produced and thus no movements have been made in the economy. It all just ground to a halt.

The new normal many news outlets and politicians are discussing must, unfortunately, talk about retailers and their place in the economy. In this sense, if any brick and mortar stores do remain in the aftermath, they may radically shift their strategies once some semblance of normalcy returns so this sort of economic impact is lessened next time if, there is a next time. What this will do to already slim profit margins remains to be seen. Perhaps entire stores will disappear from the retail landscape, doomed to be a cautionary tale of financial ruin.

The opposite may also happen, where retailers scale up their prices and products, creating a void in the middle. Here, the luxury goods become truly out of reach of the middle class, further widening the already noticeable middle-class gap. Truly, it may become a system where upward or even downward financial mobility is split between the haves and the have nots.

Priced high or low, spending power is something that dramatically affects the economy and so if no one is buying, there’s no tax being collected, there’s no economy turning the hamster wheel. For it’s part, taxing the rich and super rich has never been more important. Trickle down economics doesn’t work, those at the top aren’t merely against sharing, they’re hoarding their wealth. The current climate especially shows that those of us who make the least money for our jobs are some of the most essential workers during this crisis.

Even as retailers and department stores have stopped taking orders from vendors and fashion houses, one thing which may remain? The ‘house label’ a lot of department stores have direct control over. They may opt, with the in-house financials they’re familiar with, to bank on their house brands rather than immediately accept deliveries from vendors again. It would minimize the risk and see the possible growth of more house brand fashions, not to be confused with fashion houses such as Versace or Dolce.

Yet another thing you can bet on is the slogans coming. The phrases of comfort and the focus on a return to normalcy. For every emotional ache and paranoid anxiety attack this crisis has caused us, there will be an advertised cure coming to a TV screen or Facebook Ad near you. Perhaps public radio and the music executives will cut entire albums focused on healing and relaxation, joy, and laughter. It could be that we see an overindulgence that swings the total opposite feeling of the panic and fear we’re experiencing today. If the worst thing we do is eat some extra ice cream we might be fine but some may cross the line.

This crisis isn’t short term, it’s the new term of things. How and where retailers step back into the picture remains to be seen. We may never go back to how shopping was done before and perhaps that’s a good thing. No one wants to plunge their hand into a pile of clothing other people are messed with to look for their size. That takes time and now, it might mean getting a virus too. Far safer is it, to order your items and have them delivered.

So we may, and have seen, a boom in the delivery business. Even as most of us are working from home, there are those that are making deliveries, filling orders, and checking inventory. Truly, many of them are earning barely minimum wage or better and still risking their lives to do those jobs because they don’t have a choice. Overworked and stressed, they can be pushed only so far and now the delivery systems in the US have come under fire as well.

The increased volume of online shopping when combined with the decrease in manpower, means that many online retailers are issuing notices that customers’ orders are already being delivered with delays. Some as much as an extra week due to fulfillment or production delays, many rightly due to the extra time it takes to maintain safe and sanitary conditions. One bright spot of this virus is that hopefully health and safety regulations see a robust overhaul and upgrade to ensure workers are properly protected.

This is unfortunately, the cheaper option as opposed to providing an increase in healthcare benefits. Having both would be nice but it unlikely to be universally adopted. It is vastly cheaper to provide sanitary conditions that are a stop gap measure than to include long term healthcare for all workers. This is a facet of the American Healthcare system that is under heavy scrutiny and is sadly, a topic for another time.

Hopefully, we begin to value more, those who are working retail and by extension, delivery jobs. Many will see that without retailers, stores remain shuttered, shelves are empty and inventory isn’t ordered. If physical stores really do end up on a downward trend, maybe it’s time to consider a raise for the delivery person, not the CEO. After all, it’s not as if the CEO will go out of their way to personally find an item for you would they? Bet you your lunch though, that we see nothing good will change from this and retail workers will still suffer. Maybe less, maybe more, but suffering will still happen until we can safeguard every job, beginning from the bottom moving upward and not the top down.

Sincerely,

The PNH

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