What did retail leaders need to embrace during COVID-19 to survive and compete?
COVID-19 required retail leaders to immediately accelerate digital channel investment, restructure supply chains for resilience, and rethink store formats. The companies that acted decisively in the first six months maintained customer relationships and emerged with structural competitive advantages that proved durable.
1. COVID-19 accelerated the shift to digital channels by an estimated three to five years in a matter of months. 2. Retailers that survived maintained customer relationships through digital engagement while stores were closed. 3. Supply chain resilience became a competitive differentiator, not just an operational function. 4. Consumer behavior changes during COVID-19 proved largely permanent, requiring structural rather than temporary responses.
Coronavirus is having a clear impact on retail. Most non-essential stores are closed, and digital channels are a solution. However, what does this mean for big traditional brands who have not embraced digital? For those brands, their identity is in question because COVID-19 is a disruptor. Identity is difficult to change. It usually means mistakes and the negative that potentially accompanies those mistakes.
The Macy's and Sears Lesson
At Shoptalk in Las Vegas in March 2018, two keynote openers illustrated the stakes clearly. Macy's CEO declared digital change, VR and mobile shopping, and a Facebook store. Sears reinforced retail, traditional growth, and zero emphasis on digital. The results followed. Macy's remained in business, financially flat but still paying dividends per their 2019 annual report released March 30, 2020. Sears Holdings filed for Chapter 11 bankruptcy on October 15, 2018, just seven months after the conference.
Identity Is the Core Challenge
Identity is our foundation: our religion, nationality, tastes, music, fashion, and career. It lies at the core of how we conduct ourselves day-to-day. In a corporate environment, it is where you place your energy. For many traditional retailers, digital channels had been 0% to 30% of sales, but for many retailers they were now approaching 100%, unless selling at Walmart, CVS, and other essential retail locations.
Besides the obvious logistical challenges, many retail leaders did not build their careers on digital nor are they digitally native. It puts them in an uncomfortable situation where they have to ask subordinates for help. Consider Chanel, which removed the buy button from their website because the goal of their digital content was to drive customers to the store since the in-store experience was critical to their identity. The digital content's focus was primarily on brand awareness and driving foot traffic to store.
The Path Forward
To change our identity, we have to declare it. It has to be clear that we will need to change how we do business. Every single person on the planet has been impacted by COVID-19 in some way. It has opened up teams to organize video conference calls and work from home, while companies continue to pay massive rent obligations for their retail spaces and offices. We will come out of COVID-19, but this social experiment has allowed us to equally grow digitally. This is the moment where CEOs can safely embrace and become digital.
The retail sector faced an existential inflection point during COVID-19 that accelerated structural shifts already underway, requiring leaders to rapidly adopt digital channels, rethink supply chains, and restructure cost bases to match permanently altered consumer behavior.
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