What will be the long-term coronavirus pandemic industry impacts? As much as I wish I did, I don’t have a crystal ball. But…. I have 3 big industry predictions that will change where we shop, where we travel, and where we source our products.
Of all the jobs I had as a young person, my favorite was working in retail. I loved shopping, picking out clothes for other people, dressing the mannequin, reading fashion magazines, and more. While in high school my dream job was to be a retail clothing buyer. The plan was to graduate high school, attend college then move to New York City, go to all the high-end fashion shows, and pick out the next seasons fashion. Though none of that happened, I am still passionate about the industry.
My love affair with the retail industry is probably why I was sad when I pulled into Gordman’s only to see the bright yellow and black signs that read: STORE CLOSING. Within a week, I read our local JC Penney is closing.
WOW! 14 Retailers Have Filed Bankruptcy This Year (and it’s only June)
Pennsylvania based Gordman’s and JC Penney is just one of many retail chains that are either closing, filing bankruptcy to restructure, or shrinking their retail footprint. According to Retail Dive; 2019 sent 17 major retailers into bankruptcy. For some — including Payless, Gymboree, and Charming Charlie — it was their second trip to court. Bankruptcy also proved fatal for more retailers in 2019, as liquidations increased. In all, retailers closed more than 9,500 stores last year. Sadly, 2020 has not faired much better. Retail Dive reports 14 retailers have filed bankruptcy so far this year and we are only in June. The retail industry has been struggling for years, coronavirus just pushed them over the edge.
Most believe its Amazon and the internet’s fault these retailers have failed. I would agree that it is part of equation, but it is more complicated than that. It was a perfect storm of the emergence of online retailers like eBay (remember them?) and Amazon, increase in choice because of the internet, customer behavior changes, the rise of support local and lack of the large retailers keeping pace with the changing customer style preferences. Sears tops the list of retailers that were too slow in adapting to change and keeping old clothing styles and lines.
Other Hard-Hit Industries
Retail is not the only casualty of coronavirus COVID-19. Restaurant chains, movie theaters, doctor offices (dentists, eye doctors, etc.), event venues, pet care, dry cleaning establishments, casinos, amusement parks, higher education, and the travel industry. However, many of these industries will bounce back but, some of the companies within these industries will close forever.
It is my prediction that some of these consumer behavior changes will be permanent and some will not. Therefore, I believe some of these industries will change permanently and some will adapt to temporary changes in consumer behavior.
Stratavize Predictions Of The Future
I see several big shifts in a variety of industries. However, for this article I narrowed down to 3 big industry predictions that will change where we shop, where we travel, and where we source our goods.
Prediction #1: Rise of the Boutiques
Etsy ushered in the ‘buy handmade’ and American Express’s 2010 Shop Small campaign is gaining more and more traction. It is my belief we will see a resurgence of downtown or niche area shopping. It is almost like we will be going back to a time when families shopped in small stores for specific items. Do you remember a time long before the big box stores? Dollar General saw an opportunity to go small and go rural, to combat Wal-Mart and that strategy has worked. We will continue to see malls close and more retail boutiques open.
What will it take for the rise of the boutiques to be successful?
Community leaders and Main Street organizations working together to provide the right mix of places to shop, eat, and play. Now is the time for communities to reimagine their downtown shopping districts and put into place programs to spur boutiques to rent there. Additionally, community leaders need to be thinking ahead about what to do with empty malls. If we see a further decline of indoor mall foot traffic, it will not be long before malls start closing in rapid succession. The last thing any community will want is a big ugly eyesore. The big box is out, and boutique is in. With that said, boutiques must be bold, different, and providing an experience for customers. Give customers something they can’t get on Amazon. It’s a great opportunity for artisans and handmade goods creators to build in-roads with boutique owners to offer a unique mix of products.
To that end, here’s my retail industry prediction, 10 or 15 years from now, a larger percentage of consumers will either buy online or from small retail stores. Does that mean Lowes or Home Depot will close? No, but I suspect there will be a lot fewer investors buying up property for large strip malls full of retail stores like Tuesday Morning, Party City, or Barnes and Noble. The pie is being divided up with boutiques getting more pieces. The question becomes what to do with all the empty large strip mall storefronts.
Prediction #2: Tricky Travel
An analysis by Oxford Economics on April 15, posted to USTravel.org, models the economic impacts of the travel industry from expected downturns in terms of GDP, unemployment and taxes. An updated analysis will be released mid-June. Travel industry losses will result in a GDP impact of $1.2 trillion in 2020! WOW!
I believe coronavirus concerns will likely curb international travel for a while. Though, the airlines have seen an increase in domestic travelers, it is still significantly down compared to 2nd quarter 2019. It is my travel industry prediction that people want to travel but, will explore closer to home.
What can be done to make travel less tricky?
Tourism is often focused on attracting travelers from faraway lands. However, now is the opportunity for states to capture more ‘local’ tourists. Meaning this is a perfect time for tourism bureaus to launch targeted campaigns to people within a 10-15 county radius. People want to get out, explore, and yet have space away from other people. This can give way to marketing trails, outdoor activities, parks, and more. Local tourism bureaus can hyper-target people not far from the destination and who are ready to rediscover closer to home.
Where to stay, that is the question…
Where will coronavirus impact leave companies like Airbnb? That is a good question. Airbnb’s launch brought with it a wave of new travelers and unintended consequences in many markets. For example, Venice, Italy, saw natives move out and investors move in. There are some cities that are more short-term rentals than they are locals. If this market doesn’t bounce back we will see an economic impact in these communities.
The jury is still out on short-term rentals and whether travelers will feel comfortable and safe in a post-Covid19 world. If travelers want an experience along with clean and private spaces this could lead to an increase in boutique motels.
Roadside motels were wildly popular as cars became more reliable to travel long distances and families could afford to travel. Later the interstate system took travelers off Route 40, Route 66, and out of thousands of small towns, essentially beginning a wave of motel closing and hotels appearing along the new interstates. Business Insider quoted Tenaya Hills, the design director at Bunkhouse Group, a hospitality company known for revitalizing roadside motels in Texas, California, and Mexico, said that a boost in road trippers will also influence where travelers choose to rest their heads. Road trippers may be traveling closer to home and ready to return to unique motels for accommodations.
Prediction #3: USA and Africa Made
Have you stopped at the grocery for one or two items only to notice there are fewer things on the shelf? Yes, months after the first case of Coronavirus. On Sunday, I was looking high and low for Bush’s Baked Beans, the shelf was bare. And… this was not the only thing. Coca-Cola Company announced a shortage of key ingredients would amount to fewer cans of Diet Coke.
United Nations warned of food supply crisis because of the coronavirus pandemic, resulting in 265 million worldwide to experience acute food shortage.
As GoodRx.com reported India and China, two of the largest distributors of the active ingredients in medications, are also grappling with the virus and are experiencing slower manufacturing times due to labor shortages. Sharing a list of over 20 medications that are currently in short supply.
By some estimates 75% of U.S. companies have experienced supply chain disruption due to coronavirus pandemic. As thousands of companies moved offshore in the 1970s, 80s, and 90s, the U.S. lost more and more control of their supply chain and often their patents and intellectual property.
What Should the U.S. Be Doing to Protect The Supply Chain?
My supply chain and production industry prediction are the return of some critical goods being manufactured to the U.S. and the expansion of manufacturing into Africa. China is rapidly investing in Africa and moving their manufacturing there. The Chinese push for more technology and innovation, along with their rise of the middle class, is driving them to seek cheaper labor. With the launch of African Continental Free Trade Area (AfCFTA) in 2018, I believe there’s path out of poverty through manufacturing for Africans. Both the U.S. and China have benefited from this economic vitality strategy. I will share my concerns about China’s involvement in Africa in another article.
For this Big 3 Industry Predictions For 2020 and Beyond, article, my hope is the U.S. will find a balance between investing onshore and offshore, and that offshore is in Africa. Additionally, U.S. manufacturers need to explore ways to invest in Africa in a sustainable and eco-friendly way.
Shifting Our Business Models
In summary, there’s opportunity among the chaos we are experiencing in the U.S. My list of industry predictions could go on and on but, the big 3 are travel, retail, and manufacturing.
The writing is on the wall for large retailers, now is the time for small boutique retailers to claim market share by offering a unique and tailored shopping experience. As humans, we travel and explore, and we are likely to do that more often closer to home. This change in behavior can help pull small communities out of the recession but, only if they work together to showcase what they have to offer. Lastly, Covid-19 has shined the light on our fragile supply chain.
What’s the big industry predictions that you have?
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About the Author – Lauralee Hites
After nearly 20 years in corporate America, I decided to serve the world in a new way. Today, I operate a boutique consulting firm that specializes in Strategy and Management Consulting. You can always drop me a line at firstname.lastname@example.org or call me at 765-914-2847.