Stay Calm; Don’t Panic 🙂
If you work at or run a retail brand right now, your work environment is probably like a scene from one of the apocalyptic movies. Even it is orderly, there is probably a palpable sense of anxiety and dread.
Hopefully, your brand has already finalized a business continuity plan that addresses what and how to operate in a government-mandated work from home environment.
I am writing this note from NYC which is one step away from lockdown, and the brands I work with have all instituted a remote work policy for headquarter employees.
Like the stock market, a month ago retailers were enjoying record levels, but in the past week, we’ve gone from peak to trough due to the global coronavirus (COVID-19). The best brands have embraced these trying times and responded in turn.
I’ve had the benefit of living, working and managing through several economic shocks and after 20+ years, my consulting firm has adopted a crisis playbook for brands, manufacturers, consumer products companies and retailers.
Consider this free consulting (feeding the karmic bank), so here are 3 broad and simple steps I would highly recommend you and your teams make in the next week (if you haven’t already):
Depending on your brand’s size, geographic reach, location, channel strategy and level of bravery, your initial response to this pandemic will likely fall along the following spectrum:
- Close Stores: The brands we love, admire and stan were models for #flattenthecurve. Global brands like Apple and Patagonia were among the first to announce they were closing the majority, if not all of their stores out of an abundance of caution. And they are paying store employees throughout the temporary closure. Yes, traffic was likely down dramatically in affected areas in the US, Europe, and ROW, but the financial impact of closing the entire chain of stores will hurt. Of course, this was absolutely the right thing to do, and those brands seized the opportunity to make a statement that others will follow. Not only for their customers, but also for the employees of those brands who are literally on the front line of the virus. Bravo to the unflinching early movers!
- Limit Hours: Another approach in this declining footfall environment, is to reduce hours so stores can record some revenue, while lowering employee exposure and store labor expense. Canadian retailer Lululemon was one of the first to announce limited hours on Friday 3/13, but by Monday 3/15 they had reversed their position. Many department, convenience and grocery stores continue to operate on regular or limited hours, undoubtedly to cover the overhead of their large footprint and massive employee bases. However, Nordstrom announced just yesterday that they are changing their policy, and will join the heroic brands by closing for 2 weeks.
Retailers Announcing Their Coronavirus Policies on 3/16
Whether your brand decides to close stores or limit hours, if you are in hot spots such as NYC, Seattle or San Francisco, the government may decide for you by ordering all non-essential retail to close. Whatever your position, just be prepared for what inevitably will be coming your way.
Once you’ve addressed the 5 alarm ‘brick and mortar’ fire, and you grasp that the retail sky is falling, it’s time to focus on defense. To ensure your company is an on-going concern, you must get a handle on your expenses, inventory, supply chain and cash on your balance sheet. Cash flow is king in retail, and yesterday was the ideal time to prioritize revenue-generating expenditures while delaying or cutting non-essential spend.
Ideally, like the gallant, cash-rich brands who will pay employees while they are closed, you should want to do the same. Building out weekly cash flow models and creating best and worst-case scenarios will help you assess your debt, lease and mortgage payments, cash flow, and funding availability.
Keep in mind, restaurants with their laser thin margins are typically NOT in a position to pay employees while closed. So absent receiving government assistance, many of our beloved bars, clubs and restaurants will likely close their doors for good. Tom Colicchio, celebrity chef and restauranteur, predicted 75% of those restaurants will never re-open!
In short, please make the hard decisions now, before you are faced to make the hardest decision – filing for bankruptcy.
Top of mind for me and my omnichannel clients is figuring out how the online channel can prosper in this new stay-at-home paradigm. Diverting talent and resources away from closed brick and mortar stores and into the online, fulfillment and logistics areas seems a prudent and wise choice.
Amazon recently announced plans to hire 100,000 people in warehousing and delivery to capitalize on this trend. In these unprecedented times, what are you doing to turn lemons into lemonade?
I find it interesting that disasters tend to be catalysts for unearthing heroes. I encourage you to not shrink in fear, but to step forward with your ideas.
In business school, my favorite case was from a Moral Leader class (yes, ethics and business school do mix). The protagonist was CEO James Burke and we examined his actions during the Tylenol product recall saga. So few industry titans we studied exhibited the empathetic and compassionate leadership of Burke, and I am encouraged to see many executives adopt a similar approach by putting store and corporate employees first.
Finally, my suggestion is that YOU as an individual do whatever you can to ensure you take care of yourself. Self-care during these stressful and unprecedented times will allow you to show up and present your best self for your teams and family.
If the images, stories, and experiences from China, Italy, France, and the U.K. have any bearing on our situation in the U.S., things will get worse before they get better.
I have tremendous faith in this democracy we have created. We have faced pandemics before, and we will emerge stronger and better.
So please heed the warnings, wash your hands, and practice social distancing. Personally, I’ve found a great group on Twitter who balance being informed with being entertained, and that’s the perfect prescription to sustain me through these trying times.
Be safe out there good people.
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Lockie Andrews is the CEO of Catalyst Consulting (www.catalystconsult.com), a boutique advisory firm to retail and consumer brands, digital, media and technology companies, as well as venture capital and private equity funds. Since January 2019, Lockie has also served as the Chief Digital Officer (CDO) of UNTUCKit, a digitally native brand located in New York City.
With 20+ years of general management experience, Lockie has assisted high growth companies (e.g. Nike, Lane Bryant, Limited Stores, ANINE BING, and various high growth startups) in diverse areas such as digital transformation, technology, analytics, digital marketing, revenue enhancement, and operational/financial improvement.
Lockie is a speaker, angel investor and sector lead for the HBS Alumni Angels of NYC, and the Co-VP of Programming for the HBS Club of New York.