By Erik Rosenstrauch
It’s Black Friday in November 2020: Who is willing to wait with hundreds of strangers outside a Target, Best Buy, or Walmart for that $89 television? Being in a crowd feels uncomfortable and risky.
Not to worry. In the new world for shoppers that the coronavirus has created, you will be able to reserve your Black Friday parking spot online. With social distancing protocols in place, you’ll stay in your car and wait for your order to be delivered.
This shift in how we shop and buy admittedly favors the biggest retailers, because only the strongest will survive. Opportunities for small and nimble competitors may not return to retail, even when the restrictions are relaxed. Would you start a mall-based store today? Online and mobile sites do a fantastic job of finding goods and either delivering them to your home or enabling you to pick up at the store, without coming into physical contact with people. Going to a store where crowds drive the business model doesn’t make sense now, and may not until a COVID-19 vaccine is found.
The economics of many general retail stores rely upon foot traffic, which were in decline before COVID-19, and commission-based salespeople, who have taken a huge hit in the current crisis and may look elsewhere for work. There are always the exceptions to the rule, like Apple AAPL, +1.03% retail stores or even some stores that combine fashion and fit, like Lululemon Athletica. LULU, +2.27% . Those stores are showrooms for iconic proprietary brands, and possess a cultural element that is hard to replicate online. But even those physical locations will see declines in sales if the mall in which these stores are based falters.
The grocery and household goods category is different, as the purchase frequency of food and essentials make it more likely that weekly in-store purchase patterns will persist. Even though the number of visits may slow, the basket size is increasing. Further, if COVID testing is offered at Walmart WMT, Kroger KR, -0.09% , CVS CVS, -1.30% , and Walgreens WBA, -1.95% , the frequency of visit to these major national chains will increase from already elevated pandemic levels. Imagine the truck driver who needs a COVID test in order to get on the road every week, or the high-school soccer players who need tests before going to the state tournament. Those retailers with well-established national pharmacy operations will benefit from the increased traffic to the physical retail locations, which will translate to in-store shopping.
Smaller brands can find a niche
The new economics of retail no longer work the way they did before the crisis In the shadow of the coronavirus, winners among grocers and personal-care retailers will bring speed, value, and convenience to customers, plus a safe environment. This means massive deployment of personal protective equipment, masks, and enhanced sanitization on a daily basis.
Small, emerging brands face a unique challenge now in competing with the largest national brands or private-label suppliers to the largest retailers. For these up-and-comers, here are some strategies to consider:
• Enhance your in-store and omni-channel marketing plans with the largest players in the grocery and pharmacy industries — those companies will increase share over the coming months.
• Ramp up efforts to communicate with consumers through targeted influencer campaigns and social-media spending.
• Develop partnerships with other complementary brands — the “peanut butter and jelly” approach will drive success for both brands.
• Enhance the brand message to appeal to the post-pandemic consumer — messages that embrace family, patriotism, health and safety.
• Align with philanthropic organizations as corporate social responsibility is more important than ever. We are all in this together. Ensure that your brand is part of the solution.
Erik Rosenstrauch is president and CEO of retail marketing firm FUEL Partnerships.