Way back in 2017, when retail’s biggest problem was moving to a more digital model and figuring out how to get a better read on consumers instead of just continuing to push product on them, Mark Cohen, professor at Columbia Business School and former CEO of Sears Canada, said then that legacy players were “facing an Armageddon” and “basically circling the drain.”
Add a pandemic to that and the crisis could fell many more than just those that have been around longest.
“This pandemic exposes the entire industry to an Armageddon, as well as our entire society,” Cohen told Sourcing Journal in its latest ‘On the Ground’ video. “There will be winners, there will be losers, but unlike the comment I made in 2017, there are going to be far more losers when this thing is over.”
In the midst of retail store closures, brands are battling it out with landlords who are facing their own challenges—neither can really afford the financial losses they’re presently facing or a prolonged period of lights out at stores. But a failure to partner could spell disaster for both sides, according to Cohen.
“There was in the normal course a fair amount of constructive cooperation, but today it’s all bets are off and the entire cycle of engagement is broken,” he said. “A retailer that believes in earnest that they’re going to come out on the other side of this crisis with a viable business will attempt to shore up their liquidity…but with regard to landlords and vendors, they have to recognize that if they kill their partners, their partners won’t be there for them on the other side.”
What this may mean, he said, is a new type of retailer-landlord relationship emerges post pandemic.
“If you have any degree of optimism, it’s a real mistake to just slam the door shut and tell everybody to take a hike,” he said. “Just simply stiffing a counterparty, as in what we’re seeing today, is an expression of bad faith of enormous consequence.”
Check out more in Sourcing Journal’s new ‘On the Ground’ video series, which brings new and needed voices in the supply chain to the fore.