New Normal: Evolving Retail and Consumer Products

Two months after the WHO declared COVID-19 a Global Pandemic, we are beginning to see the early indicators of what it will take for Retail and Consumer Products companies to be successful in the ‘New Normal.’ 

Before we dive into the capabilities needed for success in the new world, it is important to understand how we arrived at our current state. Not the current state of the virus or its spread.  Rather our current state of business reality, a reality that started with a failure to evolve beyond the 1970 business school thinking: Location, location, location. Capitalism at its finest. Build it, they will shop. Under this thinking, we have continued amass more malls and shopping centers, even as we witnessed the rise to eCommerce and digital marketplaces.  Instead of embracing new technologies and new ways of selling, we remain anchored to our past and old way of thinking.  

‘If I build another store, it will add another $10-20M per year in revenue.’ 

This wild west store expansion mindset has fueled an explosion of retail to more than 23 square feet of store space per person in the US. That is more than 4x the shoppable space as the next closest country, the UK. Add in a major pandemic, and you find two industries struggling because they can’t break free of the gravity pulling them back to the physical store.    

That’s right, two industries. Consumer Products companies are riding shot gun on this journey as they have remained completely dependent on an aging distribution model that is over indexed on traditional physical retail. One would think that after retailers expanded white labeling practices over the last two decades that CP companies would have reinvented their business model or at least diversified their distribution. Sadly, they did not, instead they focused on new value-added services, trade promotions, and some expanded print marketing to include digital marketing. My favorite answer to the diversification question is when a CP company points to their store on Amazon. No offense to Amazon, but we have all seen the MSRP priced branded product listed on Amazon by the CP company then surrounded by either Amazon Basics or other knock off products.  At the end of the day, the Retailer owns the consumer and the CP company is completely dependent on the retailer for distribution. 

Which leads us to the inflection point we are in right now. Even as stores and malls start to reopen: 

Will shopping in a store ever be the same? Should it be? 

Will consumers return to the malls or gather in crowded restaurants?  

Will consumers abandon brands who failed to stay in stock? 

Will shop owners change who and how they work to fill their stores? 

Over the course of the next few posts, we will uncover the future best practices that Retailers and Consumer Product companies are already undertaking to break free from their gravity. We will talk about ways to move the glut of Spring Inventory from the 50% of shoppable square footage that has been closed to quickly building relationships with 25M+ consumers to moving beyond historical transactions volumes to plan demand. The Retail and Consumer Products industries are essential, if not critical to our way of life. Let’s continue to evolve and break free from the gravity of how we used to do things to better serve consumers in our new normal.