Episode: 280 |
Liz Dunn:
Retail during COVID:


Liz Dunn

Retail during COVID

Show Notes

Liz Dunn is a noted retail expert who regularly appears on CNBC to discuss the industry.

In this episode, Liz shares a perspective on how the coronavirus pandemic is affecting the retail industry. We cover multiple segments including grocery, home furnishings, home improvement,and apparel.

Follow Liz on Twitter: @Lizabeth_Dunn

On LinkedIn:  https://www.linkedin.com/in/lizabeth-dunn-6677034/

Her company: https://pro4ma.com/

One weekly email with bonus materials and summaries of each new episode:

Will Bachman 00:01
Welcome to Unleashed the show that explores how to thrive as an independent professional Unleashed is produced by Umbrex, which connects you with the world’s top independent management consultants. I’m your host Will Bachman. And I’m so excited to be here today with Liz Don, who is a noted retail analyst and advisor. She regularly appears on CNBC to talk about retail. She has been quoted in the New York Times, Washington Post Financial Times, Bloomberg and every other mainstream media. Liz, welcome to the show. Thanks for having me. So Liz, I’d love to hear your perspective on what is going on in the retail landscape. I know it’s kind of open ended, but you tell me where you’d like to start?

Liz Dunn 00:46
Well, many retailers are are thriving, Walmart, Target, Amazon, others are fighting for survival, and many might not make it. retailers are really struggling with the, with the shutdown. And they’re they’re fighting to figure out how to retool their business to adapt to what might be the new normal.

Will Bachman 01:11
Talk to me about retooling So, you know, some innovations are kind of obvious to just consumers like me, we’ve been doing instacart, we never really did instacart before. We’ve done curbside pickup at Home Depot where we just drove up in the truck and they put the stuff in the back. What other sorts of innovations Do you see going on maybe behind the scenes?

Liz Dunn 01:37
Well, it’s interesting that you say you you hadn’t done instacart. Before, it’s I think most of America is experiencing that. So we’re seeing this period of really rapid customer shift to some of these omni channel capabilities, and that probably won’t go away. And so a lot of people have learned how to transact differently in a very short period of time, and a lot of retailers have learned how to shift a significant amount of their business to you know, buy online, pick up in store pickup curbside, I think that there are, there’s still another wave of that to go as many cities and states open up, open back up and kind of figure out how they’re going to deal with social distancing for some extended period of time, but still have businesses open, there’ll be more of that so many of the fashion retailers are trying to now figure that out. And we’ve had a lot of retailers have been focused on omni channel initiatives for some time. And really, that just kind of means you know, the customers is maybe beginning their journey online and then and then transacting in the store, or somehow that merchandise is flowing from the store, I think there’s going to be much, much bigger focus on that going forward, including, you know, retailers learning how to how to ship from store and how to do it in a lot greater proportion than they have historically. They may be using, you know, store associates to fulfill that last mile. So there’s a lot of really interesting things going on. And we’ve we’ve sort of advanced yours in a very short period of time, because of this pandemic.

Will Bachman 03:25
I’ve seen some statistics about how the US has like way more retail space per square foot of retail space per capita than other countries. I think it was some crazy number, maybe 10 times what China has, where China has is doing so much more online right now. What What do you see happening kind of broadly with that amount of retail space? Do you expect a lot of malls or, or stores just to close to close down? Like they won’t be sustainable as we shift more to more ecommerce?

Liz Dunn 03:58
Absolutely. So that’s the backdrop that’s, that’s really kind of making all of this even more urgent and even more dire than then it would be normally for for many retailers, you know, take off the the retailers that sell essentials and just you know, think about mall based retailers and fashion based retailers, department stores, those those are really, really struggling and will likely be much smaller businesses going forward. I think Macy’s CEO, said as much recently on CNBC, he’s just as you know, we don’t know but we know it will be a lot smaller. And there are many, many predictions out there about the number of malls that will close and the number of stores that will close but really we’ve had a period of elevated store closures over the last kind of four years. And so we’ve seen a lot of retail bankruptcies and this is this is just going to you know, kind of exacerbate that activity. Retail you’re right In, in the US is much, much more over stored. The retail square foot per capita is, is more than double any other developed nation. And in most cases, it’s, you know, four or five, six times as much as, as other countries, other developed nations. And then when you start to think about China, which is still in the process of its, you know, developing its consumer economy, were significantly more over stored. So people look at kind of the rebound that’s happening in China, as they open back up and say, Oh, you know, maybe, maybe this is a blueprint for us, meaning to us, I’m not so sure, because we have some underlying weakness in our industry that sort of needs to be addressed and has been in the process of, there’s been a calling of the heard happening, and I think this is just going to accelerate that. So what’s probably going to happen is a large number of department stores are going to close. Some people are saying half of the us department stores will close now, that won’t be one size fits all, we’ll see retailers like JC Penney’s likely take, you know, take the brunt of it. Neiman Marcus is also on the list of potential bankruptcies. Hudson Bay with john sacks, they’ve missed some interest payments. And, you know, so there’s a lot of really distressed department stores, and what will happen as a result of that, as many, many malls will become unviable. There are I mean, numbers differ depending on who you ask, but round numbers about 2000 malls in America, and most people agree that there are maybe 250 really good ones. So those are some pretty dire numbers. I’m not saying that, that, you know, 70% of malls are gonna close, but I do think it could be, it could be a pretty big percentage, kind of half over time, because many of the many of the leases kind of require there to be a strong anchor in there. And And once those departments were started to close in mass, it really becomes difficult to fill the space and difficult for those malls to remain viable.

Will Bachman 07:37
What are people thinking is going to happen with all that space?

Liz Dunn 07:43
redevelopment is, is you know, what people are looking at. I mean, I guess two years ago, people would have said, Oh, they’ll become co working and light medical. And now that looks sort of not not very realistic. After everything that’s gone on with wework. I think that what consumers seem to want is, is kind of entertainment and engagement. And we have experiments like American dream in New Jersey, where they’re saying, you know, can we can we draw people in with some sort of entertainment options, that that you know, create the traffic, and then people transact. But in a world where we might be living with a need to limit, you know, large gatherings for some period of time, that becomes a difficult. So

Will Bachman 08:40
let’s talk about some of these innovations. And maybe some are totally new, but I’m curious to hear how they work. So instacart and other services that deliver groceries to your house? How do those actually work? So you place in your order? Do they have someone just kind of run around the grocery store and with an app or something and throw it in a grocery cart? Like how does it actually work?

Liz Dunn 09:10
Yeah, so they have a they have your shopper and they, they do they run around the grocery store and they they look for the items you’ve selected. They text you and say, Hey, the you wanted? You wanted organic black beans? No, no, those aren’t available. just celebrated cinco demayo. So thinking about black beans, but you wanted organic black beans, those aren’t available, will you take the non organic ones. And, you know, you have that conversation and then they and then they bring it to your house. Now it’s created some challenges, and there’s certainly a lot of a lot of concern about worker health and worker rights and worker pay that’s kind of come out of that. And increasingly, with, with the food shortages in places like New York, the the organic black beans is suddenly becoming like a white bean can aloni that you can’t make a talk about us but but you know that that is generally how it works is you have a person who is who’s doing the shopping for you and handling that last mile. And groceries has been an area where, where experts have been predicting a big shift to online for some period of time. But one of the challenges has been that, that last mile grocery is something that, you know, generally has to be closer to the consumer, in terms of you know, where it where it’s actually waiting for the, the shopper to pick it for you. So the last mile has been the challenge. And you’ve seen companies like instacart pop up to sort of meet that meet that challenge and help people that sell groceries, kind of deliver them deliver them digitally. But one of the other problems relative to places in Europe, where you have much, much higher grocery penetration is the fact that we are not that dense. So you know, sitting here in in New York, where you and I live, it’s it’s a pretty easy thing for an instacart person to go to the Wegmans or the whole foods or whatever, fairway all of which are within two miles of me, and get me whatever I want and bring it here. If you’re in, I don’t know, rural Pennsylvania, where I think your in laws live and where my in laws live at. That’s like miles and miles from from the nearest grocery store. And so they can’t get someone to handle that. And that’s a much different situation than many other places where you have a very, very high penetration of grocery purchased online and and delivered via, you know, some sort of service that handles the last mile isn’t the last mile becomes 30 miles? It’s, it’s kind of a bigger challenge.

Will Bachman 12:24
Yeah. So right now we’re, we’re at our place in Pennsylvania, and we’re about 10 miles from State College. And it didn’t, you know, I don’t think we used to have instacart. But now they’ll actually deliver out here to the farm, which has been amazing. You know, that’s where 10 miles from town, and instacart delivers, which has been great avoids going to the grocery store. How does how does that work? So is it the same the same person that delivers your groceries? Is that the person who went through the store and picked it all up?

Liz Dunn 12:54
I think it varies depending on where you are no is the answer in in New York, but but I think that in, I’m not sure how it works in rural Pennsylvania or in some places where it’s less dense. But I think, you know, we’ve got such a concentration of people. And in New York and the delivery portion is is probably, especially now a lot faster than it can be consolidated among several, several orders. So here in New York, it’s a different person that picks it and that actually delivers it.

Will Bachman 13:31
And do you have a sense of the economics of how much extra do they charge you for the delivery? And for the do they charge you more per item, you know, or like, you know how much extra they basically charging you if you if you are going to spend $100 on groceries in the store? Like how much extra does do you charge by going through instacart.

Liz Dunn 13:51
I’m not an expert in this, but the delivery fee is, is one aspect and then there’s an upcharge in depending on which service you use, and which which retailer you work with, there’s there can be an upcharge. And there’s also a delivery fee. But I think that in this in this time where there’s sort of a land grab for these type of services, people or companies are looking to offer sort of better value. I mean, we’ve certainly seen some price gouging in, in some places, and I think I paid $25 for pure RL at an Ace Hardware recently, but it was a big bottle. But still, I think that in general there’s a relaxing of some of the fees and and a desire to kind of use this use this moment as an opportunity to gain new customers and, and so it’s less expensive than it probably would be in a normal time.

Will Bachman 15:00
What are you seeing going on in the home improvement sector, so Home Depot and Lowe’s, what’s going on? There are people, you know, putting on mass and going and, you know, shopping and doing their lawn garden and fixing up their house.

Liz Dunn 15:17
Yeah, people are spending a lot of time at home these days. And, and it’s a good time to, to tackle those home projects. I think that that there is, it seems like there’s a lot of activity there. And there’s, you can also buy some of the essential cleaning products. And until recently, you could buy masks at at a Home Depot or Lowe’s, I think they’ve diverted some of their supply to, to, you know, frontline workers, but, but nonetheless, there is there is a lot of activity in the home, home improvement space. And it’s one of the places where people are saying, you know, if I’m going to be here, I might as well might as well tackle this project that I’ve been waiting to do forever. And I think, you know, your home becomes much more important when you’re spending all of your time there.

Will Bachman 16:14
What about home furnishings companies like William Sonoma, pottery, barn Restoration Hardware? How are they doing?

Liz Dunn 16:24
Yeah, I think they’re on the spectrum they’re doing you know, they’re doing better than then some because same thing you really want to feather your nest if, if you’re spending all your time there. Also think it’s I mean, it’s kind of exposing some of our vanity but the this zoom conference call or whatever your whatever your conference call, method of choices, is kind of creating a little bit of a pressure to have a nice backdrop right? You don’t want

Will Bachman 16:57
all the fancy old fancy bookcases, right of all the TV. Yeah.

Liz Dunn 17:03
Exactly. With the right, the right assortment of frames, and vases and, and whatever else. So I think relatively they’re doing they’re doing pretty well. Now, I’m saying relative to, to everything else, that’s, that’s happening relative to all of retail, but I think it’s difficult for, for anybody to grapple with the closing of the stores, and anyone who has a large portion of their, of their network and, or a large portion of their sales in retail stores. Home Furnishings is an area where we have seen a lot migrate online, more than the average, in retail. So somebody like William Sonoma, or Restoration Hardware, they have a really very significant portion of their, of their business online. But something that, that Restoration Hardware might grapple with, or even Home Depot is the number of professionals that are that are using their services. So that’s been a concerted effort by both of those companies, to really court, the professional contractor or professional designer, and a lot of that work has been has been halted. So you know, so there are pieces of their business that are probably doing well and then others that are kind of on hold for now.

Will Bachman 18:35
What about the apparel sector, I imagine that’s been hit pretty hard with people not needing to go buy new clothes for going out and so forth.

Liz Dunn 18:44
apparel is, is probably the worst place to be maybe maybe like travel accessories, but other than other than some, you know, the kind of smaller nations I think apparel is a very, very bad place to be right now. They have high fixed costs in the form of rent and, and store staff. Now, many have furloughed their store staff and aren’t paying their rent but which I’m sure you’ll want to talk about. But, but nonetheless, they they have these high fixed costs, they also have a decent amount of inventory on hand that they still probably need to pay for. So you know, their inventory turns four or five times a year and in the case of fashion goods, the inventory loses value rapidly once a season changes. It’s it’s really putting them in a pretty precarious position. I’ve seen some marketing from retailers where they’re trying to be creative and talk about you know, your what you wear for your work for work from home and, and, you know, dressing up for zoom calls or, or whatever the case may be. I think that it’s a stretch and many retailers that sell fashion goods are seeing you know, eight 90% of their business go away overnight. That said, I think there’s I mean, I’ve talked to some companies in the, I’m gonna say more casual space that are digitally native, and their businesses is decent, it’s, it’s good. And there are a couple of things going on there. If you do have a product that kind of meets this moment, meaning, you know, soft clothes, I always like to call them, it, and you have a digital marketing approach that has worked for you in the past, it just became a lot cheaper to go out and acquire new customers. So I think there, I think it’s not a one size fits all. But for physical retailers that sell fashion goods, that’s pretty tough business to be in right now. There are some pockets of strength Dell for digitally native companies.

Will Bachman 20:57
Let’s talk about behind the scenes. So what have you seen in terms of just with Coronavirus around the world supply chains being disrupted are, you know, for companies, you know, that are doing well like Amazon or Home Depot or Walmart, that maybe source a lot of their a lot of their goods from China or from overseas, our you know, our ships still traveling or our containers still getting through ports and on the train and on the on the roads? What are you seeing in terms of supply chains?

Liz Dunn 21:37
There haven’t been any really large scale disruptions yet, with the exception of you know, a handful of items, temporary shortages that that are getting worked out. I think it’s in everybody’s interest to, you know, to get goods to the floor, if you can sell them. I think the bigger issues related to supply chain are, you know, longer term does this expose a I mean, I think I think China did a pretty good job getting factories up and running again, as quickly as possible. And I think, though, you know, if this if this virus were worse or less, if it ran rampant for a longer period of time, I think that the concentration of manufacturing in China would be a real problem. So I think every company that has a real concentration there is evaluating, you know, what their business looks like three years from now and how they evolved to not have such heavy concentration in China. And I think, I mean, in some conversations I’m having that’s, that’s leading to, you know, focus on India, maybe South America and Central America. But nonetheless, I think the concentration in China is probably going to be less going forward. And it’s it’s the mean, there was already that conversation happening as a result of, of, you know, tariffs and, and everything that’s, that’s gone on with trade wars. But I think that it’s just amplify that. I think many retailers that are experiencing these kind of severe downturns in their business have, have just cancelled every order that they possibly can. So, you know, the gaps of the world are are canceling and 80% of orders for fall, which is sort of interesting, because we don’t really know what the sales environment is going to be for fall, we know that the spring goods that they didn’t sell probably won’t be selling in fall. So I don’t know, how this plays out. And whether it exacerbates a, you know, prolonged negative trend, if you don’t have inventory, because you couldn’t pay for the inventory that you that you had on hand, and then you don’t have yet you know, then if the customer comes back, they have nothing to buy. It’s kind of an interesting conundrum. But I think that, that the supply chain is just completely disrupted this year. It’s not only because because factory workers haven’t been able to, you know, go to their jobs. It’s also because because, you know, retailers, the end market has dried up and there have been just, you know, all kinds of cancellations and, and changes. So there’s probably going to be in some cases, a glut of inventory, in other cases, inventory shortages, and just overall mass chaos.

Will Bachman 25:00
That’s chaos. Nice to look forward to. Yeah. What a challenge from today. Yeah. So for consultants listening to the show who, you know, maybe serve the retail sector, what are some projects that you think might be happening out there. So you kind of alluded to one possible effort, which might be internal, but where companies might be looking for some thought Partnership, which would be think rethinking their whole their footprint, their supplier footprint. Sounds like one thing. And then another bit sounds like process change is, you know, driving more, both local last mile delivery as well as curbside pickup, and I don’t know if that typically requires much process change or change inside the store to prepare for that. Any other types of investments that you see retailers making to retool for the the new world

Liz Dunn 26:03
I absolutely think that the process change related to you know, kind of omni channel. And, you know, curbside pickup, that kind of thing is a huge opportunity, because what’s happened in this, in this crisis is that people have, I mean, it’s, it’s kind of, it’s gonna be an interesting business case, at some point, but they’ve, they’ve done whatever they need to, they’ve kind of taken almost like a Lean Startup approach to, to getting some of these things turned on, you know, they never contemplated curbside pickup before at at many of these retailers, but they just had to figure it out. And they had to figure it out quickly. But what they’ll need to do going forward is optimize it, figure out how to really go back and retool their systems and their processes to make sure that they do it efficiently and effectively. And they don’t, you know, put their employees at risk, they don’t let their customers down. And they they do it as profitably as they as they can. So I think that’s an opportunity. You mentioned supply chain, I think that’s a big opportunity, I think there’s going to be a new mix of stores and online and companies that need to figure out how, what they want to look like in 2021, whether or not they need to close 20% of their stores or 40% of their stores or, or, you know, if there’s some opportunities to open stores, I think that all of that is is a big opportunity. I think that this is also probably going to shift, retailers focus to more, I don’t know fast, to faster procurement and quicker return. And that’s a process change that not everybody has completely embraced. I mean, it’s been in effect in the fashion world, where I spend a lot of time it’s been a focus for a long time, you know, kind of this fast fashion, but many retailers have approached it like, okay, we can maybe do 20% of our of our product in this kind of fast fashion mode, and then still have the 80%. That is that is you know, sourced and merchandised in the same way. And I think that that changes going forward, I think you want everything to be as flexible as possible and as fast as possible. And so there’s just a lot of process change involved in all of that. And then finally, I think there’s a big piece on the worker friends, this has really made us step back and take a look at how we staff, our stores. What is the commitment that we have to our workforce, both in terms of health and safety and pay? And I think, for anyone that that received any of the cares, act, funds, you know, they’re gonna figure out, can I keep 90% of my of my employees? Can I rehire 90% of my employees? And what does that look like? So I think that I think there’s a lot of opportunity for independent consultants out there.

Will Bachman 29:28
We talked about omni channel a bit. So I understand that that means all channels, and I imagine that it has something to do with your mobile phone as well as going in the store and online but a little bit ignorant about it. Could you explain sort of what omni channel just means and then how to company out of stores, retailers go about actually implementing it. Let’s talk you just help me give me an overview.

Liz Dunn 29:57
Yeah, I mean, it’s been kind of a long history, so I’ll try to keep it brief but I think when when ecommerce really began to, to disrupt physical retail, there was a many organizations kind of approached it somewhat separately. So they had their online team and maybe even separate inventory, separate Merchandising, and then they had their, you know, physical stores and how they merchandise those and stock to those. And over time, I think what, what retailers learned is customers don’t think of it that way, right? I don’t say I’m going to go to Macy’s calm I, you know, I, if somebody asked me where I got my, my shoes, I don’t say I got them@nordstrom.com, I just say Nordstrom. And so there was a big move to, to do a lot of things that made it more seamless from the standpoint of the customer. So a customer might, and actually over 70% of customers do start their physical shopping journey online, whether that’s from a desktop or, or from a mobile device. And increasingly, it’s from a mobile device. So there have been all these changes in consumer behavior, that have forced retailers to rethink how they, how they view their business and, and kind of not view it in silos. So it’s really about having having one look at inventory at transactions and being able to, to service customers, however they come to you, and not really think about what channel they came in and have a separate way that you might deal with a return or that you might deal with a purchase. Regardless of where it originated. So customer might kind of look online and then end up in store, they might actually buy online pick up in store, they might just buy online, and it’s and it’s unbeknownst to them, it’s shipped from store, certainly a lot of return activity happens in store, and how do you how do you kind of deal with that and process those, but it’s required a lot of a lot of revisioning of the inventory. And and, you know, sales attribution, how how store associates are incentivized if they’re on a commission, and they get a bunch of returns from online, that’s, that’s presented a challenge. But really, at the core, it’s about creating a seamless customer experience, and making sure that whatever channel the customer design decides to interface with kind of lives up to the full brand promise. All

Will Bachman 32:56
right, so there was a lot in there that I want to unpack a little bit and ask some questions about so. So okay, so one was just this idea of incentives. So if a salesperson at the store is on commission, and you mentioned this term sales attribution, like to understand what that means. But so was it the case that if someone walks in the store and returns some stuff, then that was basically counting against that salespersons commission to talk to me about that piece a little bit.

Liz Dunn 33:24
Yeah, historically, that was a that was a challenge. And I think most retailers have corrected it now. But there’s part of the problem with with the are part of the tension between retail stores, and e commerce has been this idea that stores want to get credit for what they do in their four walls. And sometimes what they do in their four walls is except to return from, or often increasingly often, what they do in their four walls, four walls is accept returns from online and so if you are looking at sales, negative returns, that becomes a challenge for a retailer and and for the, you know, store associate, they’re looking at it it’s like this return is making me so unhappy because I know it’s counting against my numbers. So most retailers have have evolved to to not I mean, whether or not they’re their Salesforce is commissioned, there aren’t that many commission Salesforce retail sales forces out there, but but even if you’re not, you know, quote, unquote, commissioned many, many stores are bonused on sales. They’re certainly measured on what their sales look like. And so you’ve got to kind of look past ecommerce returns because particularly in fashion businesses, but in all businesses, returns are elevated online and, and so if you’re counting that, you know, quote, unquote, against a physical retail store, you’re going to create some some tension In the process and and that does not support a seamless customer experience.

Will Bachman 35:06
Yeah, you mentioned that retail stores are now in some cases, shipping, maybe the last mile for, for orders that were placed online as well as the receiving returns, have retailers had to go and retool and sort of fought for carve off spaces of their stores to basically be this order fulfillment center where they can pick and pack and ship.

Liz Dunn 35:32
Some have, for sure. I mean, I think we’ve, many of us have had the experience of, you know, the buy online pick up in store, area of a target or Best Buy, or, you know, even in Nordstrom, Nordstrom has, it has a pretty impressive one in Seattle, that, that I experienced recently. Not too recently, but pre pandemic, I think that, that what’s been the more interesting thing to me is, is the is the process, behind the scenes, the fact that they have these fairly sophisticated systems for understanding, like, Where’s the most profitable place that I can ship this from. So there are a couple of things that you that you want, you want, you know, a profitable place to ship it from and quick, so you have a customer promise that you’re going to get it to them as quickly as possible. And in some cases, it’s more explicit that that that it’s like, you know, one to two days. And then you also, you know, want to want to have a profitable shipping. And so if you can find a place in store, where it’s where it’s a slow selling item, and ship it from there, you might have avoided a mark down. But you know, you don’t want to do that if it’s, if it’s going to let the customer down in terms of their, their shipping time. And also, you know, shipping cost is a factor. So there are a lot of, there are a lot of things that go into deciding whether to ship something from the distribution center or from the store, but increasingly, retailers are looking at, at their stores as distribution centers and and thinking that, you know, we have hundreds and in some cases 1000s of fulfillment centers, all over the country. And maybe that’s a better way to think about servicing this small pick pack operation that is ecommerce.

Will Bachman 37:42
Yeah. And, you know, let’s say there’s a store in my town, and I order it and then the algorithm decides it should ship it from there. Are they shipping it through the US Postal Service? Or ours? In some cases? Do they use some kind of just delivery service that will have a person driving around in a car and pick it up and delivered to to my house? How are they getting it that last mile?

Liz Dunn 38:07
It depends on the retailer. And I think that, you know, different retailers are still experimenting with different things. We’ve seen some some bad headlines related to certain retailers asking their their store associates to you know, just drop it off on their way home, which I think is is probably inappropriate, but but it’s been tried. So I think it just depends and, and the retailers are still trying to many retailers are still trying to figure out what that looks like and and there have been big businesses like shipped or instant cart that that have, you know, have cropped up out of this need, I think there will probably be be more that that come up out of this need because the customer expectation around fulfillment speed keeps increasing. I do think that one of the things that’s happened out of this pandemic is that customer expectations about shipping speed have have been temporarily suspended. So you know, I am ordering masks on Etsy and three weeks seems like a great fulfillment time but but I think that the long term trend has been customers expecting faster and faster shipping. And most retailers that are in, in the game of trying to you know, compete head to head with Amazon are trying to get same day or at least next day shipping. And if you have a store that’s in the same zip code or you know even in the same county as as your customer, that might be the fastest way to get it to them.

Will Bachman 39:52
So these delivery services like instacart may be expanding to cover all sorts of retail, not just grocery perhaps

Liz Dunn 40:01
I mean, I haven’t heard of that, but it’s sure it could happen. I think probably what’s what’s more likely is his new companies, and they probably already exist. I just haven’t heard of them yet. But new companies really taking advantage of this, this opportunity to focus on delivery, last mile delivery from stores for whatever industries need them. So I think industry specific is, is probably the way that that it’ll go. Just because, you know, the, the requirements for grocery are different than the requirements for Yeah, no,

Will Bachman 40:44
yeah, that makes sense. I mean, some, I mean, it seems like something that like Uber might get into, or companies like that went, last year, I had a big order from a printer that I needed to get shipped. And via UPS, even though it was only 40 miles from my house, UPS was gonna charge like $200. And I just ordered an Uber and had the Uber go and pick it up and come to my house, it was like a $45 Uber ride. But, you know, they went into the guy was nice, he went into the place for me picked up seven or eight boxes, but in his drunk drove it to my house. And same day, got it an hour later, versus ups being you know, a couple 100 bucks. So I can imagine, you know, that seems like an opportunity for someone out there listening to, for a startup to do to kind of solve this last mile problem for for non grocery retail. Now, we sort of take it for granted, I can go on my phone, and you know, see if some sheet of plywood or some, you know, porcelain or some kind of, you know, electrical outlet that I need to buy to do some home improvement is available at Home Depot, it’ll say, you know, if it’s available in store, but you talked earlier how that it didn’t start that way? What What did was it a real struggle for retailers to kind of make that data available and you know, to kind of upgrade their systems or whatever to sort of know real time what inventory was available in stores and to be able to allocate it to orders is that process pretty much done or still retailers still struggling with?

Liz Dunn 42:20
some retailers are still struggling with it. But I think that over half of retailers have the ability to, to locate in store, you might not be able to transact, but certainly, I think it’s over over half of retailers are now able to do that. It’s not always perfect. I’ve had some experiences, even with Home Depot last year, late last year, where you know, we ordered something and trying to think what it was a propane. So maybe it would mean there might have been some issues related to the legality of selling propane online. But nonetheless, you know, we bought it online and went to the store and it wasn’t there. So, you know, those those glitches are always problematic, because the customer remembers that one time it didn’t work much more than 10 times it did. But But in general, I think most retailers have have adapted and, and can locate in store. But, you know, it’s not all the inventory. I mean, even on a world class retailer, like Target. You sometimes can’t get the information about whether or not this is available in store, particularly during this crisis when you’re trying to locate you know, Lysol. Good luck.

Will Bachman 43:47
What’s your point of view on Main Street retailers? So, you know, a few years ago, maybe before omni channel, small mom and pop shop wasn’t that big of a disadvantage versus a national chain terms if you could walk into either one and buy what you wanted. But if if now omni channel is requiring a much bigger kind of technology, investment, marketing investment, you can have your app and check what’s in store is what what’s your point of view on how mainstream RETAIL IS GOING TO fare with the pandemic?

Liz Dunn 44:22
Yeah, I mean, Main Street retail until the pandemic had been outperforming for many years, there was kind of this small business thing that was really that was the customers customers like shopping that way and it’s but this pandemic has created a whole bunch of challenges. They these retailers typically don’t have this. I mean, they’re not dealing with the large landlords and so they can’t. They can’t, you know, just join some industry group and saying we’re not going to pay rents. They’re tricky. You know, they are struggling to figure out how to how to navigate this. And most that, I mean, I have a lot of friends that do kind of small town Main Street, maybe not small town, but Main Street retail. And I think they’ve been pretty successful at accessing the cares act. And so that’s a small lifeline. But I think it’s, it’s the, we’ll definitely see a lot of stores closed a lot of Main Street retail close. And that’s, that’s really unfortunate. But I think we’ll also see a lot of companies kind of remake themselves, what many of us as individuals are doing is probably the same thing that many of these companies are doing is kind of using this crisis as a, as an excuse to, you know, Future Proof themselves a little bit. And so they are rapidly learning how to how to, you know, sell online, how to kind of, you know, buy online pick up in store, I walked by a toy store here in Brooklyn last week and saw that the guy was open, but he had a table out there. And I said, and this is like a independent toy store, small toy store. I said, Do you sell balloons? Because I had, I wanted to take a friend some balloons for her birthday and safe distance with masks and gloves, but but I said, Do you sell balloons, and he said, You have to buy it online. And then you can pick it up in store, which was mind blowing to me from, you’d seen what this store looked like? That, that that was his response. But you know, they’re learning new skills. And so I think that they’ll evolve and, and increasingly, it might be an opportunity for them to service their customers better. Because when I’m sitting on my couch in a non pandemic time, and I say I need balloons, I’m probably just going to go to Amazon. But if I know that, I’m not sure that this is what the store is called, but Carroll gardens toy store sells balloons, and that I can buy online and pick up in store in two hours. Why would I not do that? That’s just a much better option. It’s better for the environment. It gets me my my goods in a more timely fashion. And you know, you always feel good about supporting a local business.

Will Bachman 47:20
Yeah. And what about bookstores?

Liz Dunn 47:25
I I’ve heard bookstores are doing are doing well. I mean, it’s it’s kind of a weird nostalgia thing or something. But I think people are interested in reading physical books right now. And I think that bookstores can offer a I mean, there’s there’s sort of an interesting trend in, in physical bookstores. Again, in Carroll gardens, I heard a woman on NPR who was saying her, her bookstore was was really, they’re doing great because people are at home, and they’re bored, and they need things to do. So anything that is a hobby seems to be on a better trend. Right now. I mean, everybody’s doing all of these jigsaw puzzles and, and painting and I don’t know. So books seem to be seem to be on the right side of things right now.

Will Bachman 48:28
That’s good. And you mentioned a couple times rent, what are you hearing about, you know, retail stores that are maybe talking to landlords, maybe not paying rent, not able to pay rent? What’s happening? What do you expect to happen with all the space? if, you know, you mentioned that some mainstream retailers may just not make it and maybe some apparel retailers not make it? We talked about malls earlier, but what do you think is gonna happen with all this space outside of the malls, if stores just closed?

Liz Dunn 49:01
I think there will be a number of dead malls and maybe there is a way to retool them to, in some places to offer more affordable housing, I think about you know, the bay area where I’m from, and, and there are dead malls, and there’s also a major housing crisis. So, you know, maybe there’s some opportunity for housing, I do think that medical, and kind of light medical was going to be something that’s necessary for the future. And, you know, we need space to accommodate it. I don’t know about I don’t know if it absorbs all the space. I don’t know what the future is for large format entertainment venues. I would have said that that was probably the way it was going before this pandemic, but it’s just very difficult to now in terms of rent like Think that in short term, retailers aren’t paying rent. And until you know, businesses back, they, they will likely continue to push back on landlords. And I think it depends on how important the retailer is to the landlord, whether or not they get all the concessions that they are asking for. But I think the long term change that will, that will come out of this is that retailers will be much more cautious in terms of the leases that, that they’re signing, and this has been going on for some period of time, but I think that, you know, the days of a 10 year lease with, with the, you know, annual escalation clause are, are over, they should be over. These are just, you know, really irresponsible and, and can be, can lead to a retailer’s downfall, and many of the bankruptcies that we’ve seen in in retail are our restructuring leases, because these leases are really like debt instruments, you know, if you’ve signed a 10 year lease, and, and are guaranteeing that you’re going to pay this amount for this extended period of time. I mean, it’s like that. And, and so I think that lease terms are going to come down, I think that we’ll see a lot more protections kick out, kick out protections for for business disruption, and I think that we’ll probably see a lot more percentage rent, meaning, you know, I pay 9% of sales. good times and bad. That’s what I pay. So I don’t sell. I don’t pay.

Will Bachman 51:45
Oh, interesting. Well, Liz, this has been an amazing discussion. I learned so much about retail, I feel I understand omni channel a lot better. Where can people find you online?

Liz Dunn 52:00
I am at Elizabeth underscore done. There’s no e at the beginning of Elizabeth because my mother wanted me to have to explain that for my entire life. But lisabeth underscore done on Twitter, or I’m on LinkedIn or you can email me at Liz at PR o for ma.com

Will Bachman 52:20
and I will include those links in the show notes. Liz, thank you so much for your time today. I learned a ton that really enjoyed the discussion. Thank you Well, stay safe.

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