Retail Agility and Survival  2021-2025

Retail Agility and Survival 2021-2025

How soon will a post vaccine rebound arrive? And what is that really going to look like?  Some believe it will be as soon as 2021, others are being cautious with their forecasts because there still too many unknowns.

retail reloading years 2021 to 2025
2021- 2025 the 5 most important years in the future of retail

While I say rebound, I for one do not expect a return to how things use to be anytime soon. That will be a challenge especially after a year of abstaining from what we used to do, either by choice or by shutdowns and restrictions. I do however believe that retail needs to be rethinking about the next five years.  I prefer a focus on Retail Agility and Survival 2021-2025. Because we are going to be dealing with fast paced change over the next few years and retailers need to be identifying and resolving risks and opportunities.  There used to be a time where you could plan retail strategies for five years in advance. That’s not what I am advocating. My view is different begin a plan that creates your brand as a leader of the future over the next five years. 

In addition, now that the Canadian and U.S. governments have laid out their plans. We expect that it take up to 3 quarters of a year during 2021 before 50-70% of the population is inoculated.  For a little for context, I conducted an online poll in November 2020. That poll showed over 47% of respondents were willing to wait 6-12 months post vaccine before they go back to old routines. Even if that number turns out to be 10-15% it would be challenging for a full rebound.

Couple that with the inoculation plan. And we have a potential situation of businesses having to wait another 18 months for a recovery. That’s is just not good enough for non-essential businesses!

Convenience the risks and opportunities

Let me put it to you this way. If I were running another large business anywhere in the world today. I would not be changing my  focuses that much and only marginally depend on a return to robust consumer activity. At the same time I would be focused on getting ready for a different future.

The task ahead may seem impossible to some because so much has already changed. Consumers have quickly adapted to change and they have adopted new behaviours. Convenience has been the publics main objective since the beginning of e-commerce. It’s very important to call this out, because in January of 2020, businesses were still fighting other retailers; brick and mortar who were successfully digitizing their businesses and all e-commerce only players as well.

And then there was this. Governments trying to protect the public from this health care risk, have unwittingly divided the retail sector into; essential and non-essential. The words; “essential and nonessential” in government messaging like it or not, suggests that the public can do without this or that service. At least for now. There was no intent to help one business over another. However it has provided an advantage to essential businesses to grow faster and take share.  Non-essential businesses lose their place in the consumer market. Couple that with major e-commerce players, using their algorithms, and AI capabilities to decipher their data on consumer preferences. You now have created a new competitive landscape, that can wean out the weak from the strong. Worse yet, many non-essential businesses are already weak.

Are Government support programs helping?

Each situation is unique, some businesses that have little debt may find government programs of use. However, businesses with significant debt, and especially if tied to hard assets, will find it challenging to refinance. Or if that debt comes with covenants on loan performance, government assistance may not be enough. At best what these programs have to offer is a short-term cushion. The majority of non-essential businesses don’t have have the ability to manage through a longer timeline.  What non-essential businesses need is a stay of execution. That means business owners and operators have their debt arrears and repayments extended in longer amortizations. Borrowing more to service debt is not a healthy game plan for anyone.

Business needs customers for retail survival

There is a push by government to unlock that $90 Billion saved by consumers to spend on the economy. And the $80 Billion shored up by businesses to invest on growth. However the question is will consumers and businesses do that, knowing the potential risks ahead. After all even with a vaccine, the virus must to come to an end. We don’t know if the vaccines provide 6, 12 or 24 months of immunity or longer.  Also some polls suggest that the 60-70%. of the public is bought into the vaccine.

But the eagerness to have the vaccine drops amongst groups a CBC poll shows that the public will take their time assessing the vaccines performance.  Yet,  approximately, 26% will either not take it or wait several months and another 38% will wait a couple of months. This in my opinion can be a very slow shift back to past social and shopping activities. It will require more than the vaccine to act as a catalyst which brings consumers back out again. We will need a pandemic free environment without masks, social distancing, restrictions and closures. How long will that take? And now with a more infectious variant in Canada what are consumers thinking now?

Planning 2021 through 2022

My advice as of late is to plan for 2021 and 2022 together. Because a great deal of volatility will continue through 2021 and none of this will be without setbacks. I cannot emphasize enough, do not go into 2021 making plans and thinking that things will return to normal. That will not happen as fast we would like.  Planning must be focused on what’s missing in the ability of a business to compete. Competing in the new economy is about more retail survival in 2021, which means fighting in the trenches. Or more aptly we can all it agility. Many corporate chains lack that basic skill, they’ve never harnessed it and are unable to train it. It’s a culture trait that takes time.

Future opportunities  2021 to 2025future futurism

Forecasting too far into the future per-say is difficult. The only people you can listen to on the future are either those that can cross alternate realities (haven’t met one yet0, or those that have a background in business development (to be clear they have built businesses). Everyone else is guessing. Anything outside of 18-24 months in business today is a hopeful speculation in this climate. And sometimes a lot of BS.  However if I were building the future this is how I would be interpreting it today.

Quite simply I would be looking at a decade and dissect it into two waves 2021 to 2025 and 2026 to 2030. Look the reality is this, no one can predict the future! Anyone of us can take a whole lot of specific events and spin them into a yarn about the fairytale future. That is not how you build businesses or an industry.

On the other hand if you wanted to help rebuild an industry you would look at it from a very pragmatic perspective. Where have we been? What is the external environment like? The risks? What is likely to change? How will it change? Something you really don’t appreciate unless you have the responsibility for a business to succeed as a CEO or board director is to understand risks. I can tell you risk management as it relates to strategy is the number one job for board of directors.

So where do you start?

You go back to the fundamentals of your business training, and you conduct what you should be doing every six months an environmental scan against your strategy. The SWOT analysis! And then you would create a TOWS matrix not complicated but that’s about piecing together your hypothesis. By the way, you can tell the difference here between a business developer and someone trying to loosely predict the future because they lack real world experience. This process shows it.  And then you would begin to define critical success factors to ensure your thesis holds water. Again you need real world experience to deliver on that as well.

Facts.

The pandemic is decimating the old economy and everything from theatres, cruises, hotels, conventions, restaurants, malls and shopping, are all coming into question on their ability to recover back into their old paradigm.

There will be a demographic shift with those over 55 considered seniors, and those with underlying health issues. Convenience will mean even more to this group of consumers. They will not be so quick to change their habits and risk poor health.

However I believe that by 2025 we will see and need more profound changes in physical retailing that will allow stores to have more agility in their means to change atmospheres, messaging and experiences. There is no question that robotics and AI are going to play a bigger role. You don’t need a crystal ball for that. The challenge will be identifying technology that is current and workable for all retailers to invest in. That has been and will continue to be a major hurdle for all retailers. Where and how to invest.

Retail Agility & Survival 2021-2025

What will be important in retail and other consumer facing businesses?

  1. Work from home creates a seismic shift in itself. The impact that this will have on downtown central business districts, and business parks has its own ripple effects on consumer facing businesses.
  2. Technology, consumer data and e-commerce are the new economy.
  3.  Consumers want more convenience.
  4.  Prepare for far greater analytics driven competition.
  5. Artificial intelligence is your new business development and marketing team.
  6. Robotics will continue to improve productivity to drive convenience.
  7. Far more infrastructure spending in supply chain and DTC will not abate.
  8. The last mile…. your business is only as good as your promise to deliver on time.
  9.  Social Purpose. Get to know what this means it is as important as the environment.
  10. The environment; belief in climate change, sustainability and clean energy are growing.
  11. Live stream shopping…the future of branding and selling. Take a look at Asia.
  12. Video conferencing to build business cultures and strategic capabilities. A new business.
  13. Grocery: delivery models and grocery wars  Walmart Loblaw Sobeys 

Conclusion:

The next five years are all about learning and applying retail survival skills, to enhance any business’s agility to stay in the game. If you have not yet read The Great Transition The Emergence of Unconventional Leadership. I highly recommend that you do to be prepared for the future which is just days ahead.

George Minakakis is the CEO of Inception Retail Group Author of The Great Transition The Emergence of Unconventional Leadership
Also watch for two new books,  with announcements in the near future. 

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