Core Retailers More Optimistic About Surviving Crisis
ActionWatch’s most recent survey of core retailers shows an uptick in optimism that many industry shops will be able to survive the coronavirus crisis.
Patrik Schmidle of ActionWatch answered some questions for us about highlights from the survey.
What is the biggest headline?
Patrik Schmidle: The biggest headline is that even though the implementation of the emergency funding program was controversial and challenging, the large majority of the core retailers received the funds they applied for. And that has made those that responded to the survey much more confident that they will survive.
Five weeks ago, before much of the money was dispersed, more than 80% of retailers surveyed told us that their ability to survive was tied to the timing and amount of emergency funding. Now, almost all of them are optimistic about the future of their stores, especially if they can reopen in the near future.
Do you see any other fundamental change from the previous survey results?
Patrik Schmidle: During the last survey, almost 90% of the doors were closed in the first week of April. As of last week, almost 60% either have already been able to open or expect to reopen their doors before the end of May.
As a result, there was a fundamental shift from almost complete uncertainty about the future to at least some degree of certainty that the emergency funding and adjustments they’ve made will bridge the gap. That is very encouraging.
Were you surprised at how many retailers want to streamline fall and holiday orders?
Patrik Schmidle: No, this is consistent with what we’ve heard anecdotally, including with what you’ve been reporting. Clearly, the big unknown is if and how fast consumer demand returns. So, it’s only natural to be cautious and conservative given all the current inventory.
What do you think about how many have shifted to curbside service and home delivery?
Patrik Schmidle: It’s remarkable how many shops have been able to implement alternative ways to connect with and serve their customers. Clearly, it was necessary to keep some cash flow going, but it’s not a trivial matter to change your business model overnight like this. It speaks to the creativity, agility and willingness of the shop owners and their teams to do whatever it takes to keep your business going during a time of extreme adversity.
Do you think retailers will be able to survive this crisis?
Patrik Schmidle: This crisis will change the brick and mortar retail landscape forever, but I am convinced that independent specialty retailers in our industry that are ingrained in their local communities are much better positioned for long term success than large, mall-based retailers.
This is especially true for core retailers that are able to diversify the ways they serve their customers, including adding online options and via other concepts such as endless aisle. In general, at a macro-level, consumers have a strong desire to see their local businesses survive and will go out of their way to support them if they can afford to, especially if they already have a connection with a business.
And since surfing and skating are activities people can engage in despite the social distancing guidelines, they will continue to buy the hardgoods necessary for those activities and demand will continue to rise.
The demand for apparel, accessories and footwear will likely take a while to return in our channel, but I’m confident that it will come back eventually if stores implement the necessary measures that make consumers feel safe.
What are some of the biggest things brands can do to support retailers?
Patrik Schmidle: According to our survey, the top three actions retailers asked brands to take are:
- Maintain pricing integrity in other channels
- Streamline lines for fall and holiday ’20
- Launch marketing activities to drive store traffic.
However, this crisis requires all of us in the industry to have the mindset that we all need to work together and do whatever we can to help each other so we increase the chances of survival not only for core retailers, but also for the brands.