In a pre-COVID world, sustainability was the cause du jour, direct-to-consumer startups were the darlings of the industry and rentals were on the rise.
Now that the crisis is in full swing, bringing the reality of retail into sharp focus, things don’t look so rosy for any of these players or causes.
Mark Cohen, a professor at Columbia Business School and former CEO of Sears Canada, sat down with Sourcing Journal’s founder and president, Edward Hertzman, to offer some real talk about the ways in which the industry is sure to change post-pandemic.
When it comes to the digitally native brands that have proliferated prodigiously in recent years, Cohen says the jig is up. Seeking to capitalize on Amazon’s influence and the rise of online commerce, these brands may have come onto the scene without enough working capital—or knowledge—to sustain them through a crisis.
“They were fundamentally under-capitalized going in, many of them weren’t making any money, and many had no intelligent pathway to ever making money,” he said. “It was a ‘We’ll get to that when we have to get to that’ kind of deal.”
Cohen believes that e-commerce will continue to grow at an accelerated rate, and only those with viable business strategies, reasonable outlooks and investors who are willing to hang on will weather the storm. The mindless venture capital investments of years past are over, he added.
The clothing rental market, which appeared to be on a meteoric ascent in recent seasons, has also tanked amid the spread of the highly contagious virus.
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Cohen questioned whether customers would feel comfortable wearing used clothing in the wake of the outbreak, even as the category’s key players will undoubtedly take on proactive measures—and marketing—to reassure them of product safety.
“It’s going to be a long time before customers are comfortable venturing forth,” Cohen said. Popular new models and pivots to experiential retail, once considered strategies that could propel the industry forward, now hang in the balance.
Without a vaccine to prevent the virus’ spread or a wholly viable treatment, consumers are likely to remain fearful, or at least inhibited in their shopping and spending habits.
During the crisis consumers are spending money on things they need to survive, he said. “Most can’t indulge; wants have to wait.”
While consumers will always crave newness and be attracted to fashion, Cohen believes their approach to investment in those desires will be more conservative than ever before. “They will be damaged by the crisis,” he said.
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