The Coronavirus and Its Predictable Future for Retail

By Tony D'Onofrio, Global Retail Influencer

The Retail Coronavirus Impact

In the past two weeks, the coronavirus was mentioned 160 times on 19 different retailer earnings calls. China is already a $5.5 trillion retail market and prior to this crisis, was expected to surpass the United States in 2020 in total size.

The full arrival of the coronavirus coincided with the new Lunar New Year, one of the most important retail shopping periods in Asia. As stores reopen slowly, the biggest negative impact is expected in luxury and apparel. In 2019, Chinese buyers represented 40% of total global spend on luxury goods and contributed 80% to the sector's sales growth. For apparel, Chinese consumers account for 38% of the global fashion industry. "In comparison, in 2003, during the SARS epidemic, the Chinese consumer accounted for only 8% of the (apparel) market."
 
Adding to the retail risk is China's manufacturing prowess as a global supply chain. NRF projects that major USA ports could see a 13% drop in containerized retail imports in February followed by a 9.5% drop in March.

Crisis History Lessons on the Road to Recovery

Focusing on retail, Bain & Company recently analyzed impact of the SARS epidemic in China in 2003; the earthquake, tsunami and Fukushima nuclear disaster in Japan in 2011; and the MERS epidemic in South Korea in 2015. "In all three cases, there were three phases: shock, recovery and stabilization. But the timing and trajectory of each phase differed."

The end of the Coronavirus is uncertain, but above history lessons point to eventual retail recovery and stabilization. Short term, I agree with Bain, "trust will be vital now and for the foreseeable future." While in the crisis, retailers need to continuously plan, over communicate, focus on empathy, and act quickly.

Also insightful from Bain, "by stimulating demand for online shopping, the outbreak has highlighted the broader need for traditional retailers to keep moving away from a reliance on brick-and-mortar stores to an omnichannel model." In a digitally advanced market such as China, the coronavirus crisis will further accelerate the digital transformation of retail. tonydonofrio.com

C.D.C. Warns Americans to Brace for Likely Outbreak
Americans should brace for the likelihood that the coronavirus will spread to communities in the United States, the Centers for Disease Control and Prevention warned Tuesday.

“It’s not so much of a question of if this will happen in this country any more but a question of when this will happen,” said Dr. Nancy Messonnier, director of the National Center for Immunization and Respiratory Diseases.

She said that public health officials have no idea whether the spread of the disease to the United States would be mild or severe, but that Americans should be ready for a significant disruption to their daily lives. nytimes.com

'An economic pandemic': The coronavirus is becoming a bigger threat to the U.S., economists say

Apple Reopens More Than Half of Its Stores in China Amid Ongoing Coronavirus Outbreak

Macy’s Says Coronavirus Slows Tourist Spending, Chinese Suppliers

How Coronavirus Could Hurt the Thriving Airport Retail Sector
 

Amazon Expands Physical Footprint with Bigger Cashier-Less Grocery Shop

Amazon looking into licensing its checkout-free 'Go' technology to rival retailers

Amazon.com Inc. is rolling out its checkout-free “Go” technology in a large grocery store and plans to license the cashierless system to other retailers.

Amazon Go Grocery will open in Seattle on Tuesday. It uses an array of cameras, shelf sensors and software to allow shoppers to pick up items as varied as organic produce and wine and walk out without stopping to pay or scan merchandise. Accounts are automatically charged through a smartphone app once shoppers leave the store.

The company has operated a string of Go-branded convenience stores since 2018 but improvements in camera technology and its use of algorithms have allowed it to build a 10,400-square-foot market, said Dilip Kumar, vice president of Amazon Go. That is about five times bigger than the largest existing Go store and Mr. Kumar said the technology could be deployed on an even larger scale.

“We’ve learned a lot,” he said. “There’s no real upper bound. It could be five times as big. It could be 10 times as big.”

Amazon hopes the grocery store will serve as a showcase for its technology as it seeks to sell its system to other businesses. The company has recently been in talks with potential partners and is targeting retail options including convenience stores and shops in airports and sports arenas, according to people familiar with the matter. Amazon has discussed multiple revenue models, including a fixed licensing fee or a revenue-sharing agreement, one of the people said.

The Go licensing plans are Amazon’s latest effort to partner with some of the same traditional retailers it has long disrupted, and who regard the e-commerce giant as a fierce competitor and threat. In recent years, Amazon has also signed deals with Rite Aid Corp. and Kohl’s Corp. to handle delivery pickups or returns that help drive foot traffic to their stores.

Amazon has considered offering to install and set up equipment to enable its cashierless technology and market it as a service, according to a person familiar with its plans.

Retailers could use the technology for a variety of purposes, including to track inventory or customer habits, that may stop short of having a full-scale cashierless store, said Joanne Joliet, a technology analyst with Gartner Inc. But Amazon’s size and clout could scare off some potential partners, and concerns over how their data is safeguarded may make some hesitant, she said. wsj.com

Inside Amazon Go Grocery


Amazon Says Apple Security-Line Pay Ruling Doesn't Apply
The California Supreme Court’s ruling that Apple workers are owed pay for time they spend in security lines doesn’t mean Amazon must pay a class of warehouse workers, the company has told the Sixth Circuit, which is hearing appeals from a Kentucky federal case bringing together similar suits from several states.

The e-commerce giant on Friday sought to draw lines between former distribution center worker Khadijah Robertson’s proposed class action and the Apple case, in which the California court said time Apple workers spent waiting to be searched for stolen merchandise was “hours worked” under state law because they were under company control. Robertson cited the Apple ruling earlier this month in her bid to revive her claims against Amazon and fulfillment center operator Golden State FC.

Notably, the court found Apple controlled the workers because it made them perform specific tasks before they left, such as finding a manager or a security guard to check their bags. The court also rejected Apple’s claim the searches were effectively voluntary because the workers could choose not to bring bags or personal iPhones — which Apple would confirm as the workers’ own — saying the workers couldn’t realistically forgo bringing bags and phones to work.

But Amazon does not exercise such control over its warehouse workers, the company argued. Workers can “exit the facility unimpeded” by using “express lanes,” it said. The company’s filing Friday does not define this term, but the district court’s dismissal order notes workers can use express lanes if they don’t have bags or carry metal objects. law360.com
 

F.B.I. Raids Headquarters of Company Run by Fashion Executive Peter Nygard

A task force of the F.B.I. and the New York Police Department raided the corporate headquarters as part of a sex-trafficking investigation.

Federal agents and New York Police detectives raided the Manhattan headquarters of the fashion company run by a Canadian fashion executive on Tuesday morning, seeking evidence in a sex-trafficking investigation, according to two law enforcement officials who spoke on condition of anonymity because they were not authorized to discuss an ongoing investigation.

The executive, Peter Nygard, 78, has been under investigation for at least five months by a joint child-exploitation task force of the F.B.I. and the New York Police Department, an inquiry overseen by the U.S. attorney’s office based in Manhattan. At least four women who have accused Mr. Nygard in a recent lawsuit of sexually assaulting them when they were 14 and 15 in the Bahamas have also met with the task force. nytimes.com

Making BOPIS Better: Managers Are Key
The "buy online, pick up in store" (BOPIS) trend saves customers time, gives same-day access and eliminates shipping costs. More than 68 percent of U.S. consumers have shopped this way, according to Business Insider, citing 2019 data from Doddle, a London parcels collection and return firm.

But when BOPIS falls short - often due to inadequate technology, poor service or untrained staff - customers' reactions can turn ugly. Managers are key to making BOPIS a better experience. First, know what BOPIS customers expect - and then train staff to meet those expectations.

Doing BOPIS Right - What Managers Can Do - The Running Short Experiment - shrm.org

Walmart to Combine Online and Store Product-Buying Teams
Walmart Inc. is combining its online and store product-buying teams as the country’s largest retailer seeks to reduce conflict between the units and increase profits at its e-commerce business, whose global sales will approach $50 billion this year.

Previously, product manufacturers selling their wares both on Walmart.com and in Walmart’s stores had to pitch two separate buying teams. The teams sometimes clashed over pricing differences between products on- and offline, as well as over plans to use stores to facilitate online sales for home delivery, according to people familiar with the situation.

Walmart has long operated with different e-commerce and store teams, with the latter generally based in Arkansas and the former in California or New Jersey. It has been slowly integrating the two as the business blends; last year the retailer combined its online and store supply chains and finance teams. wsj.com

Venture capital fund to help e-tailers finance moves to physical retail
A real-estate-focused venture-capital firm said it has closed a $100 million fund to invest in companies born online that are looking to join the bricks-and-mortar world. Fifth Wall Ventures is the latest firm to target this new generation of retailers, which see expanding operations into physical stores as crucial to growing their businesses.

“What these brands are realizing is that it is so hard to grow online,” said Brendan Wallace, Fifth Wall co-founder and a managing partner. Competition is intensifying, he added, “and Amazon is the company that destroys brand differentiation rather than augments it.” wsj.com

A mild winter has led to 'huge savings' for many and a boost for the US economy
A winter that is both warmer than last year and when compared to long-term average temperatures has resulted in substantial savings for people across the country. AccuWeather predicts those savings on home heating costs – for natural gas, heating oil and electricity – should continue into May.

“With the price of heating oil down and natural gas at record lows, as well as less demand because of the warm weather – that’s a huge savings for people’s heating costs in the Midwest and the Northeast this year,” said AccuWeather Founder and CEO Dr. Joel N. Myers. “That gives people more money in their pocket and benefits the U.S. economy overall.” accuweather.com

NRF: Retailers applaud NLRB on final joint employer rule
The National Retail Federation today issued the following statement from Senior Vice President of Government Affairs David French in response to the National Labor Relations Board’s final rule regarding joint employer status. The rule reinstates the traditional bright line standard under the National Labor Relations Act and provides additional clarity for employers and employees alike.

“The retail industry applauds the National Labor Relations Board’s final rule, as it reverses the controversial Obama-era joint employer standard and provides much-needed legal certainty surrounding business-to-business relationships. It should be crystal clear what it means to be an employer, and that is exactly what this final rule will achieve. nrf.com
 

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Quarterly Results

Home Depot Q4 comp's up 5.2%, sales down 2.6%; full-year comp's up 3.5%, sales up 1.8%
Rent-A-Center Q4 comp's up 1.6%, total revenue up 0.9%
Lumber Liquidators Q4 comp's up 0.4%, net sales up 1.8%; full-year comp's down 1%, net sales up 0.7%
Macy's Q4 comp's down 0.6%, sales down 1.4%; full-year comp's down 0.8%, sales down 1.6%
Dillard's Q4 comp's down 3%, net sales down 4.4%; full-year comp's down 1%, net sales down 2.4%
 

RSA Conference 2020

Coronavirus Fears Evident as RSA Kicks Off in San Francisco
Some 40,000 people descended upon San Francisco this week to attend RSA 2020 — one of the largest cybersecurity conferences in the world — where researchers, vendors and government officials come together to discuss current and emerging threats and security solutions.

The event, held Feb. 24-28, is filled with cyberexperts, CISOs and spies and typically involves a milieu from large federal agencies like the National Security Agency, FBI and Department of Homeland Security, as well as big industry names like Microsoft, Google and McAfee.

But there have been a number of notable absences, too. While the biggest concerns at RSA typically involve digital viruses, this year's biggest concern involved a real one: fears spurred by a growing number of coronavirus cases worldwide caused a number of big names to drop out of the conference at the last minute, including Facebook, IBM and Verizon. Some six companies based in China have also dropped out, some due to travel restrictions. govtech.com

Verizon joins AT&T, IBM in withdrawing from RSA over coronavirus concerns
Verizon has become the third major company to pull out of the RSA Conference, one of the biggest cybersecurity events of the year, over coronavirus concerns. AT&T left the trade show on Thursday and IBM pulled out last Friday – 14 sponsors and exhibitors have now withdrawn.

The Mayor of San Francisco – which has no confirmed cases – issued a statement urging conference-goers to "set an example to prevent fear, rumors, and misinformation." businessinsider.com

Register for NRF Dinner @ RSA 2020
Waterbar San Francisco California
February 26, 2020 6:00pm to 9:00pm Pacific
The NRF Dinner at RSA 2020 will take place during the RSA Conference on February 26, 2020, at the highly rated, Waterbar Restaurant in San Francisco, California. This dinner offers an intimate roundtable setting, in which retail cybersecurity experts can discuss industry trends and engage in insightful dialogue on cyber risks and business challenges.

Please join us for an evening of dinner, networking, and inspiration in a quaint environment. For any additional questions, please email programs@nrf.com.

At the Waterbar at 399 The Embarcadero in San Francisco: 6:00 PM nrf.com

SECURITI.ai Named “Most Innovative Startup” at RSA Conference
Innovation Sandbox Contest 2020
RSA® Conference, the world’s leading information security conferences and expositions, today announced that SECURITI.ai was selected winner of the fifteenth-annual RSAC Innovation Sandbox Contest. A panel of leading venture capitalists, entrepreneurs and industry veterans judged the contest and named SECURITI.ai RSAC’s “Most Innovative Startup 2020.”

SECURITI.ai is a leader in AI-powered PrivacyOps. Its PRIVACI.ai solution automates privacy compliance with patent-pending People Data Graphs and robotic automation. It enables enterprises to give rights to people on their data, comply with global privacy regulations and build trust with customers. businesswire.com

Hottest new cybersecurity products at RSA Conference 2020

RH-ISAC hosts CISO Networking Breakfast at RSA Conference this morning
 

RILA Honors Supply Chain Innovators

Companies recognized for groundbreaking work in analytics, autonomous vehicles, and robotics

The Retail Industry Leaders Association announced the three finalists of its Startup Innovation Award for the Supply Chain Monday at its LINK2020 supply chain conference: Gatik, Invent Analytics, and Magazino.

● Gatik provides autonomous vehicles for business-to-business (B2B) short-haul logistics. These small delivery trucks and vans are designed to operate on set routes between two business sites, such as a distribution center and a retail store or a large retail store hub and a smaller outlet. Mega-retailer Walmart is currently piloting the technology.

● Invent Analytics applies artificial intelligence to inventory and price optimization. For example, the solution can help retailers answer questions such as what inventory levels will be the most profitable for the organization and what is the value of inventory at every point in the supply chain.

● Magazino has created a robot that can pick and put shoe boxes in a distribution center. The robot is designed to work in parallel to human pickers performing the same process. Unlike other goods-to-person or person-to-goods automated solutions, Magazino's robots perform the entire picking activity without interacting with humans, according to the company. dcvelocity.com