Retailing and happy hours

The great debate now in retailing is whether or not the “new normal” will become the permanent normal of the future when this pandemic blows over.

Last week, Sweden-based H&M announced that it would close 250 of its 5,000 stores worldwide starting 2021 and would put in more investments on strengthening its e-commerce platform. H&M is the world’s second largest fashion retailer, next to Inditex, owner of Zara and other fast-fashion brands.

(Earlier this year, Spain-based Inditex bared plans to spend $3 billion over the next three years to develop a “fully integrated store and online model” while proceeding with steps to close as many as 1,200 of its stores all over the world this year and next year.)

Two key points stood out in the announcement made by H&M. First is the admission that fashion retailing is in the midst of “a very tough market,” which had steered the company’s decision to “enhance its online proposition given the importance of digital channels.”

Second point is the need for “more significant changes” in the future with regards to shop closures in view of its “excessive store estate.”

Apparently, H&M’s and Inditex’s decisions are not just borne by government strictures imposed on consumers and an aversion to physical shopping in the midst of the reported high transmission rates of the COVID-19 virus. Their moves acknowledge e-commerce’s continued rise in popularity, with the pandemic simply accelerating their moves to go digital.

No turning back

Just how far a retailer should go with its future digital platform expansion is also at the center of debates. Some companies, like Nike for example, professed that its online sales ratcheted up from June to August by 82 percent from the previous quarter even as most of its retail stores and outlets continued to remain closed.

Many athletic shoe retailers are seeing partnerships with high street stores and other brick-and-mortar outlets significantly reduced as they develop strong websites and apps that are able to reach out to target consumers in more appealing ways.

This supports the shifting landscape even in the advertising industry, where creative media is moving more towards digital channels – including popular social media sites like Facebook, Twitter, Instagram, and Tiktok.

Even the logistics industry is being transformed as companies continue to reexamine their operating systems in view of the rise in demand for their services and as competition continues to escalate. Many are looking at transforming from the “dumb pipe” model to becoming an intelligence and data house, much like what Amazon has successfully done.

The combined investments from retailing, advertising and logistics have become quite formidable, and would no doubt further solidify the push for many companies to go digital. There is no turning back.

Will players continue to see similar phenomenal growth spurts when the pandemic is declared over and people are confident of venturing once more into malls or high-street outlets? Or will the lockdowns make consumers realize that they miss little, perhaps even find online shopping more convenient and preferable?

^Losers

Meanwhile, the carnage continues in the retailing industry for companies that were not able to successfully pivot during the lockdowns and those that have found themselves falling further behind in rising to the changes of digital retailing.

In the Philippines, supermalls like SM and Ayala will have to rethink about adapting – if not surviving – the new trend, where retail lessees are either looking at reducing their rented floor spaces or even not renewing them. How these leisure and shopping complexes, marketed as lifestyle hubs, will transform bears watching.

For now, thousands of small and medium-sized retailers have permanently shuttered their stores. Some have retreated to a semblance of online marketing, but are struggling especially if no sufficient investment has been set aside to develop a digital strategy.

Some retailers have decided to wait out the pandemic and plan to return to operations only when they can safely restart and consumer appetite rebounds to pre-pandemic levels. In the fashion industry, such reclusion may last an excruciatingly long time.

Historically, economic downturns spell massive weakening in consumer purchasing power. The apparel business is one of the last to recover and appetite for new clothes and shoes would come only after people replenish lost incomes and are able to set aside spending money on non-essentials like clothing and accessories.

But by then, the dictates of the new retailing may never return to the old normal, which means that a reopening strategy without a strong digital component may no longer be viable.

Bar hops and drinking sprees

On a lighter tone, for people who hanker for the good old days of bar hopping and drinking sprees that last till the wee morning hours, curfews these days – usually at 10 p.m. – imposed by local governments are not necessarily insufferable, which proves that old habits die hard.

In Makati’s famous night spots, for example, it has become acceptable to adjust happy hours to as early as 2 p.m. from the former 6 p.m., which means that getting your fill long before the midnight gong strikes is now totally embraceable.

Makati City encourages the “safe” reopening of bars by imposing the usual restrictions on physical distancing, wearing of protective masks and shields, a maximum number of people per group, a limit on the number of alcoholic beverages ordered, and quaintly, the need to order food before guzzling any liquor.

These are small trifles for anyone trying to escape of lunacy of the lockdowns. Cheers!

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Should you wish to share any insights, write me at Link Edge, 25th Floor, 139 Corporate Center, Valero Street, Salcedo Village, 1227 Makati City. Or e-mail me at [email protected]. For a compilation of previous articles, visit www.BizlinksPhilippines.net.