3 Steps to Survive the Coronapocalypse

Photo Credit: @Krizde

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):

1. ACT

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:

  1. 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!
  2. 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

List of notable retail brands as of 3/16/20 that set the tone with their immediate announcements of COVID-19 policies for stores; These standards were quickly adopted by many other retailers.

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.

2. Plan

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?

3. LEAD

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.

-Lockie

Bio

Follow me (BlogTwitterLinkedin) to join the conversation.

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.

Innovation Universal
5 Ways Innovative Companies Attract and Retain Millennials

5 Ways Innovative Companies Attract and Retain Millennials

Despite a volatile employment landscape, smart companies are always looking for ways to attract the next generation of talent. Engaging with Millennials, however, requires a strategic approach. Are you prepared?

In this #SmartTalkHR webinar with Lockie Andrews- consultant, Angel/VC/PE Investor, and keynote speaker from Catalyst Consulting, you’ll learn why Millennials are a tremendous talent opportunity—and why they flock to certain companies while avoiding others.  Lockie will lead us through an intriguing discussion on the following topics:

  • The current trends in hiring and employment for startups, and how to leverage these trends to help your organization succeed
  • The five corporate principles that drive high Millennial engagement
  • Examples from leading large enterprises that have created Millennial-friendly cultures (and how they apply to you)

Discover the startup trends that will help your organization succeed, and learn about the principles that drive high Millennial engagement.

Watch a recording of the webinar here:

– See more at: http://www.risesmart.com/resources#sthash.ThlRZaDQ.dpuf

Screen Shot 2016-09-03 at 2.41.56 PM

Lockie Andrews is the CEO and Managing Director of Catalyst Consulting, a boutique advisory firm to retail and consumer brands, digital, media and technology companies, as well as venture capital and private equity funds. With 20+ years of general management experience, Lockie has assisted high growth companies (e.g. Nike, Lane Bryant, Limited Stores, and various high growth startups) in diverse areas such as strategy, innovation, digital marketing, growth hacking, revenue enhancement, operational/financial improvement and M&A/capital raising. Lockie is also a sector lead for the HBS Alumni Angels of NYC.  Follow Lockie on Twitter and Linkedin

 

Innovation

The Slowdown in Tech Startup Funding

Published on Linkedin May 11, 2016

In this series, professionals at Shoptalk discuss the most pressing issues facing their industries today.

 

Waiting for fundamentals and reason to return to startup investing has been like waiting for daybreak – anticipation of the inevitable awakening. Fortunately, we didn’t have to wait too long for the current market frenzy to subside.

We’ve been here before…?

It’s only been 7 years since the end of the Great Recession and 13 years since the carnage of the dot-com bust. Despite the short timing, investors seem to have forgotten the lessons from prior downturns.

Anytime technology startups are likened to mythical creatures – thus the aptly named Unicorns; privately held startups with ZERO dollars in profits, but implied valuations of $1+ billion – that should serve as a wake-up call for sophisticated investors/advisors of an impending bubble:

An economic bubble exists whenever the price of an asset that may be freely exchanged in a well-established market first soars then plummets over a sustained period of time at rates that are decoupled from the rate of growth of the income that might reasonably be expected to be realized from owning or holding the asset.

Watching the Unicorn proliferation felt like reading a textbook.  Hopefully, the coming market correction won’t be as bad at the dot-com bust.

Dot-Com Era Revisited

In the early 2000s, the initial public offering (IPO) market was the “well-established market” that foolishly priced immature companies at astronomical levels. The dot-com startups’ growth prospects did not justify the valuation forward multiples, causing a severe market pullback.

Once investor funding dried up, dot-com management teams sealed their own fate by spending irresponsibly and prioritizing growth over profits. The rest is history.

Does any of this sound familiar?

Despite the striking similarities between the dot-com and tech startup eras, some people are questioning the current slowdown in VC investment.

So what happened in Q1 2016?

Well, I believe the first rays of enlightenment are starting to illuminate the landscape.  I am hopeful that this wake-up call is a return to reason.

Depending on which venture capital authority you trust, the market seems to be signaling that something is afoot. According to Thomson Reuters, Q1 2016 was the strongest quarter for VC dollars raised since 2006!

  •  U.S. venture capital (VC) firms raised $12 billion during Q1 2016
  • a 59% increase in dollar commitments over the same period in 2015

Now despite healthy coffers, VC investment in startups during the same period was mostly flat.  So why the disconnect?

Perhaps it’s due to the realization among investors, academics and journalists that Unicorn valuations and growth prospects are unreasonable.  Only time will tell.

Here’s the good news.  Unlike prior bubbles, Unicorns are still privately held, so VC firms and institutional investors will bear the brunt of falling valuations.  Yes, startups will suffer more closures, layoffs and belt-tightening, but the fallout will mostly be contained.

Reason vs. Unicorn Fantasies

The return to reason has already begun.  Since Q4 2015, we’ve seen signals of investor caution.  The decrease in the number of Unicorns, the down rounds and the well-publicized write-downs offer additional clues.  I am encouraged by my recent retail/consumer angel investor due diligence meetings, where the focus has shifted to questions around profitability, business model and sustainability.

In hindsight, it makes perfect sense that investors took a less analytical approach when evaluating pioneers like Facebook, Google or Amazon.  However, let’s not confuse ourselves, or be convinced by the founders of the tenth “me too” startup that their primary focus should be on growth, not profits.

Yes, now that dollars and sense are a guiding force, I’m excited to meet the last startups standing.  The winners will be startups with viable business models and loyal paying consumers.  The losers will be startups with limited addressable markets and no path to profitability.

Much like the NCAA during March Madness, what is emerging is a new breed of Cinderella startups.  Founding teams that glorify grit and avoid chasing fads and vanity metrics will come out on top.

A New Day Dawns

Of course, plenty of transformational opportunities remain.  We are still just scratching the surface in the consumer industry on artificial intelligence; virtual reality; big data; and leveraging the power of technology to automate retail.  Evaluating investments in the aforementioned sectors will take time and will likely breed a new class of Unicorns who blaze a path.

For the vast majority of tech startups in more mature sectors, nightfall lasted too long.

I’m looking forward to being a conduit for those deserving entrepreneurs with good ideas, amazing work ethic and the humility to learn from mistakes. Likewise, I’m relieved to see an end to the entitled mindsets looking for a quick exit.

Thank goodness that no matter what happens in the dark of night, dawn always comes in the morning.

@LockieAndrews is the CEO and Founder of Catalyst Consulting www.catalystconsult.com, a boutique consulting firm to retail and consumer brands, digital and technology firms, and venture capital and private equity firms.  With 20+ years of general management experience, Lockie has assisted high growth companies (e.g. Nike, Lane Bryant, Limited Stores, Concrete Platform) in diverse areas such as strategy, innovation, revenue enhancement, operational/financial improvement and fundraising.  Lockie is also a sector lead for the HBS Alumni Angels of NYC.  She will be moderating the “Beyond Venture Capital Investment” panel at @ShopTalk in Las Vegas in May 2016.

 

Sources: Dealogic, Wikipedia, CB Insights, Thomson Reuters

Startups