Will Covid Heal an Industry Disease?

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For over three decades of giving industry presentations, and after three co-authored books The New Rules of Retail (plus a revision) and Retail’s Seismic Shift, one core fact remains that too much supply has been chasing too little demand in the mainstream retail industry. The disequilibrium continued year over year. “Share Wars” became a PPT fixture, and a major opening chapter in our most recent book, published in 2017. In fact, we posited it would never end. And the over-stored conundrum became accepted by most retailers, to the extent, that when mentioned, eyes would roll as if the silent response was, “Oh, that again?” If pushed for a discussion, CEOs would totally agree but could offer no path to a solution. Why? Because like climate change, which is a worldwide problem, not one country can resolve it for all, nor can one retailer reverse an industry-wide problem.

[callout]While another worldwide pandemic could lock the economy down again and break supply chains, the results would not be nearly as catastrophic as we have, and still are witnessing from this Covid attack.[/callout]

So, the beat went on with more and more stores and more and more price promoting. The low-hanging fruit, the path of least resistance strategy for growth was a never-ending battle to steal share of market. I called it the “race to the bottom.” However, I opined that maybe there was no bottom, just as Nike coined “there is no finish line.” As inspirational as that line is for Nike, “no bottom” is equally desperation-al for the retail industry.

But then Covid happened. The unintended consequence of the global pandemic was a restructuring of the industry in numerous ways, much of it for the better. However, Covid challenges have also raised some unexpected issues, that left unresolved, could cause more severe economic problems going forward. Namely, the “great supply chain collapse” is currently adding to the inflationary issues that preceded it. And Covid is still with us, promising to leave lingering problems over the near- and long-term future.

Covid’s Vaccine for the Industry

A positive metaphor for the retail industry would be a Covid vaccine that kills the supply and demand disease. While I believe the industry was beginning to heal itself in many ways, Covid’s negative effects, such as the supply chain breakage and consumers’ increasing shift to online shopping, certainly nudged the industry to speed up digital transformation. Specifically, major players in the industry, armed with AI, were beginning to drive both strategic and structural transformation. Inventory optimization and increased productivity, both online and off, were beginning to be achieved through demand and consumer-based analytics. In short, the ability to know who the precise consumer is, what they specifically desire, when and where and how often, is the magic of technology.

This knowledge and the ability to implement technology is driving greater efficiency and productivity throughout the chain, personalization and finally shrinking the space in existing stores along with the expansion of smaller, neighborhood stores. Technology unlocks the marketing power of knowing exactly what consumer preferences are in each of those neighborhoods or smaller communities. Thus, Target, Walmart, Macy’s and its Bloomies brand, and Nordstrom, are all localizing to the extent that consumers demand it. Because they can.

So, at the end of the day, it’s not about getting rid of supply, (stores and stuff) to meet demand, it’s about being more efficient and optimizing the right inventory in the right number of stores and online and satisfying demand, on time.

While another worldwide pandemic could lock the economy down again and break supply chains, the results would not be nearly as catastrophic as we have, and still are witnessing from this Covid attack.


According to Google, efficiency is the peak level of performance that uses the least number of inputs to achieve the highest amount of output. It is a measurable concept that can be determined using the ratio of useful output to total input. Not to get all academic here, but I think it’s useful to understand that tracking the millions of individuals’ shopping and transactional behavior, if analyzed correctly and more importantly implemented accurately, retailers can more rapidly grow both their top and bottom lines with fewer stores and stuff in them. This may sound counterintuitive, but it is totally the opposite. The stores and the stuff in them will be located precisely “across the street” from their loyal consumers and will have exactly the stuff they desire. And new stuff will be flowing into the stores and online on an efficiently scheduled basis.

Furthermore, if the new model that is emerging, such as Sephora and Amazon operating on Kohl’s platform, Ulta on Target, Toys ‘R’ Us in Macy’s, Top Shop on Nordstrom’s platform, and even Netflix partnering with Walmart, these matches simply confirm a new world of consumers’ demand for convenience, regardless of whose nameplate is over the front door, and as long as there is compatibility among the brands.

Pete Nordstrom, President and Chief Brand Officer of Nordstrom has told me, “Our loyal customer is likely loyal to other brands not featured in our brand, so why wouldn’t I try to have all the brands she loves in our stores so she can love us even more?”

I hope “love is in the air” and this battered and bloodied industry I love so much, hears jingle bells and finds cash and not coal in their stockings.



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