Attention All Startups: Go Digital Or Go Home

Many big brands are closing hundreds to thousands of retail stores globally and strategically shifting their focus to their online shops as e-commerce is becoming a necessary part of most businesses.

Zara, H&M, and Forever 21 are some of the largest and most popular international fashion companies. Surely many people have shopped in several of their extremely spacious retail stores at least once or twice. However, in light of recent events, the Coronavirus pandemic has forced these stores to reconsider their operation priorities. Many have decided to close several hundred to over a thousand retail stores to compensate for the profit losses they’ve taken since the pandemic broke out in March. Meanwhile other companies, including J.C. Penney Co., Neiman Marcus Group Inc., and Brooks Brothers, have had to file for bankruptcy all together.

Forbes has compiled a list of store closures in 2020, which amounted to 11,691 stores as of 4.45pm on July 23, 2020, according to Walter Loeb, a senior contributor at Forbes who covers major developments in the retail industry. To put this data into perspective, the number of store closures in 2019 was 9,879 stores; 2018, 5,700 stores; in 2017, 8,000 stores. The number of store closures in 2020 has already exceeded the past several years at an alarming rate in just a little over 7 months!

These companies were very successful at one point, allowing them to open retail stores all over the world, becoming well-known internationally. This begs the question, how can one, as a start-up business owner or an aspiring entrepreneur, avoid these pitfalls?

Why are Big Companies Out of the Game?

Just as people did not anticipate the impact of the Coronavirus pandemic on human health, companies did not foresee its reach on affecting human lives as a community. The amount of new Covid-19 cases per day and the number of deaths caused by this virus have enervated most people's urges to leave their home.

Digital Market Shift

Over the past several months, there was a major market shift from in-person shopping at retail stores to at-home shopping on online stores. Retail stores are valuable to companies because they act as a place for customers to connect with the brand and its products. It provides a convenience aspect for customers to interact with the product before purchasing it. However, now that people demur recreational activities outside of their home, retail stores have lost their value and become a liability to their companies.

Many companies have reported seeing huge decline in sales at retail stores and a surge of online sales, including Bed Bath & Beyond, whose "digital sales jumped 82% in the quarter" while "sales at stores slid 77%," according to an article from The Wall Street Journal. In order to accommodate for such a change, they "had converted about 25% of its stores into regional fulfillment centers during the pandemic, nearly doubling its capacity to handle the surge in online shopping," said Mr. Tritton, the CEO of Bed Bath & Beyond.

No Longer Serving the Needs of Their Targeted Customers

People's priorities have changed amid the pandemic, especially since public figures like Prime Minister Boris Johnson, actor Tom Hanks and his wife Rita Wilson were tested positive for Coronavirus in March. Tips and tricks to avoid the virus and ways to stay healthy became the hottest topic on every social media and e-commerce platform. Gadgets to purify the air on-the-go, handheld machines to sanitise smartphones at home, hats that come with a clear plastic face shield for further protection, and foldable plastic envelopes to safely store face masks had become everyone's must-haves on their shopping wishlist in 2020. Meanwhile things like fashion, technology, and theme parks have been moved down the list of priorities.

Brooks Brothers is a retailer known for their quality suits and "dressing the great and good of the United States" since 1818, and as described in an article from the New York Times, "it has dressed all but four U.S. presidents, and its overcoats have been worn for the inaugurations of Abraham Lincoln, Barack Obama and Donald J. Trump, among others." However, as deep of a connection as Brooks Brothers have to the American heritage and culture, the company had to file for bankruptcy during this worldwide crisis.

After all, "it is an era of remote work and job interviews through Zoom, and the postponement of celebrations like weddings, bar mitzvahs and graduations," quoted from an article in New York Times.

What Should Startup Owners Change Up to Avoid the Same Fate?

Go digital and create a strong online presence. Over the past five months, many countries have had to enforce restrictions on human activities outside of their home, which aimed to minimise unnecessary human contact to avoid the spread of the Coronavirus. Naturally, there is a surge of people shopping online because that is the only place they can shop without endangering their health.

As a startup owner, selling products through an online shop eliminates the concern for safety factor as it bypasses the human contact aspect, which is the most trusted way for customers to buy products during this pandemic period. However, this is by no means completely avoiding the human aspect of doing business with customers, as trust is still built based on human connections. Good customer service is still one of the most important foundations in any business, because having lucid communication with customers about the services and goods a company provides is crucial to its advancement in the industry.

Re-evaluate the pain points of your targeted customers. As living circumstances for many are different now, it is likely that their needs are no longer the same as the ones your company has been serving. If you noticed your customers opting out or unsubscribing to your content or platform, that is a sign that your services or goods are no longer serving their needs or solving their problems.

Furthermore, examine how your product benefits your customers now. As mentioned above, people's priorities have changed, which means what you are offering needs to be much more attractive to get customers to want to buy them, especially if your products or services are not need-based. Since many people have recently become unemployed, it is likely that people are looking to get more bang for their buck.

Stop trying to reopen your business during the pandemic. Instead, focus on building your business online with your team. Many states lifted their restrictions on businesses and public places including Florida and Texas, but it revealed to be a huge mistake as the number of new COVID-19 cases surged to a new record, and subsequently they had to reverse reopenings. Therefore, rather than trying to reopen during the pandemic and risk the health of your employees and the public, it is much more realistic to explore options that will allow for business to continue without reopening offices and retail stores.

Things To Keep in Mind

Don't lose track of your goal because of external pressure. Every business has their own objective, which is what drives the people in the company to do whatever it takes to serve their customers. Even though the current situation for businesses is anomalous, it is crucial for owners to maintain effective communication with employees in order for people to support each other within the company. Creating a sustainable support system will help keep everyone's head in the game with the company's goal at the forefront of their mind.

Galvanize individual growth within your team. Working from home is becoming a norm during the pandemic. It is a great opportunity for people to learn a new skill or explore their long-forgotten hobbies with the extra free time from not having to get to offices. Encourage employees to look within themselves and find what they believe was lacking, and guide them to taking steps towards learning it, and advancing themselves will increase their fulfillment during these difficult times. Another extra step to take is to inspire employees to use what they've learned at their job, which encourages new ideas to stimulate the team.

One of the ways to encourage employees to acquire new skills is to take online classes on Udemy, Skillshare, EDX, Coursera, and LinkedIn Learning; just to list a few of the most popular online learning platforms. They offer a variety of courses catered to different interests that range from graphic design to project management skills to transformational meditation guidance. This is an opportunity for you to lead change by inspiring growth within your team, and guide them to become more vertically-developed individuals.

"The tragedy of life is not found in failure but complacency. Not in you doing too much, but too little. Not in you living above your means, but below your capacity. It's not failure but aiming too low, that is life's greatest tragedy." - Benjamin E. Mays

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Reference

Armental M. 2020, Bed Bath & Beyond to Close 200 Stores, The Wall Street Journal, viewed 15 July 2020, <https://www.wsj.com/articles/bed-bath-beyond-to-close-200-stores-11594248448?cx_testId=3&cx_testVariant=cx_2&cx_artPos=1#cxrecs_s>

Chaudhuri S. 2020, Zara Owner to Close 1,200 Stores as It Outlines Post-Coronavirus Future, The Wall Street Journal, viewed 22 July 2020, <https://www.wsj.com/articles/zara-to-close-1-200-stores-as-it-outlines-post-coronavirus-future-11591794618>

Friedman V., Maheshwari S. 2020, Brooks Brothers, Founded in 1818, Files for Bankruptcy, New York Times, viewed 17 July 2020, <https://www.nytimes.com/2020/07/08/business/brooks-brothers-chapter-11-bankruptcy.html>

Loeb, W. 2020, More Than 11,000 Stores Are Closing In 2020 SO Far - A Number That Will Surely Rise, Forbes, viewed 23 July 2020, <https://www.forbes.com/sites/walterloeb/2020/07/06/9274-stores-are-closing-in-2020--its-the-pandemic-and-high-debt--more-will-close/#61694d8c729f>