The Changing World of Retail
The pandemic has had wide spread impact across multiple domains, and Retail is a space with considerable impact. As I mentioned in a Post last week, we have seen ten years of ecommerce growth in three months. Does the rapid surge of ecommerce represent the future, or does our human desire for social interaction serve as a positive catalyst for physical retail? Will physical retail survive in a post-pandemic world? In a recent Video Clip, Fool.com contributor Matt Frankel and Industry Focus host Jason Moser ask Shark Tank star Kevin O’Leary how the pandemic will change retail, if at all. Here is a summary of his perspective.
Those consumer goods and services companies that made the digital pivot are the ones that survived. They moved away from selling through retail. When you sell through retail, you make 50 cents on the dollar. When you sell direct to your customer, you make 100 cents on the dollar.
Retail is forever changed. We are not reopening the stores that had mediocre returns. We’re never reopening them, we’re just going to continue with the direct consumer model. To underscore the wisdom of digital investments, the example of Nike is provided. In their most recent quarter, direct sales represented almost 40 percent of their business. Now, all of a sudden you look back several years and you can recognize the investments they made in direct-to-consumer are paying off so well now.
With regard to remote work in the retail world, O’Leary provides thoughts on how it is likely to play out. He sees it being a lasting phenomenon post-pandemic, and it means bad news for hotels and airlines, but great news for the other 80 percent of the economy that’s going to accrue the benefit of that huge reduction in business travel and entertainment.
View the five minute video for is full comments.
Originally published at http://frankdiana.net on January 11, 2021.