Thread by @minethatdata

1 - Take a moment, and study the image below.

2 - There's a ton of talk out here from the experts ... talk about "DOES KOHL'S HAVE ENOUGH CASH TO SURVIVE?"

3 - That's a fair April 2020 question.

Think ahead to August 2020.

Or August 2021.

Or August 2022.

We're going to ask different questions going forward.

4 - The question we'll be asking is this ...

"What has to happen for us to shop in-person in a retail store in the future?"

5 - Start at the top of the image. Do you NEED what the brand is selling?

In other words, if you need food, then yes, you'll visit your local Safeway. Doesn't mean they won't deliver to you, but when you have a need you'll shop in-person.

Think Hair Salon, for instance.

6 - If you don't NEED something, you'll ask yourself if the brand provides a SAFE shopping environment??

Is it safe to shop at Kohl's? Or J. Crew? Or Best Buy?

A classic Black Friday doorbuster won't be safe, will it? So retail must change to be SAFE.

7 - Until there is a vaccine, retail probably can't ever prove that it will be SAFE. This is where TRUST comes into play.

Nordstrom / Best Buy will have an advantage. You might trust the Geek Squad. You might trust your personal shopper at Nordstrom.

8 - So retail will have to transform in order to offer TRUST. You might shop at Eddie Bauer if Brenda or Cole know what you want and get you in/out quickly ... Stitch Fix delivered to retail if you will.

9 - If the retail brand flunks NEED, and the retail brand flunks SAFETY, and the retail brand flunks TRUST, then WANT must be so great that the customer is willing to set logic aside and purchase anyway.

This is where you'll see all sorts of marketing innovation.

10 - This is probably going to be the area of focus that determines if a retail brand stays in business.

Almost all retailers flunk NEED. It's gonna hard to provide a SAFE environment. Most retailers pay staff close-to-zero, so the TRUST element isn't there (this could change).

11 - If you flunk NEED / SAFETY / TRUST, you'll have to do something so gaudy that a customer puts aside fear of getting sick for WANT.

The hard work is in NEED / SAFETY / TRUST.

Fail those (most will), and you move toward new marketing programs.

12 - In the short-term, marketing budgets will be trimmed to the bone.

This will potentially be counter-productive, as the retail brand will need traffic in August 2020 / 2021 / 2022 to survive.

13 - If Kohl's or Macy's has enough cash to survive, those brands will eventually need to reverse the dire traffic declines that are coming due to a lack of NEED / SAFETY / TRUST.

14 - In other words, retail is going to have to completely reinvent itself to survive.

This won't happen in the next 6-12 months. The next 6-12 months will be about a financial overhaul (bankruptcy, small marketing budget, reduced costs, major store closures).

15 - If retail reopens, you're likely to see -15% comps or -30% comps or -50% comps for brands that fail NEED / SAFETY / TRUST parameters.

This will fuel financial overhaul. 871 Macy's stores won't survive ... 10-15% of those were already gonna close. Think 40%+ could close.

16 - The expense structure of retail will dramatically change. If 85% of the sales return (that would be a fabulous outcome), many retail brands would be unsustainable going forward.

17 - So no matter what happens, it's likely that any brand failing NEED / SAFETY / TRUST is going to have to reinvent itself in some way to keep plugging along.

There's a TON of innovation coming.

18 - There will be a great reshuffling of labor as a consequence. Many jobs will be lost. At the same time, the store employee who fosters TRUST is worth so much more ... in a future world, "some" employees could earn a lot more money if compensated in a fair manner.

19 - The corporate employee gets reshuffled as well.

The inventory manager who forecasts demand in an impossible environment becomes highly valuable.

The marketer who figures out how to capitalize on WANT in lieu of NEED / SAFETY / TRUST becomes highly valuable.

20 - The merchant who sells commodity items online while selling only highly desirable merchandise in-store (creating WANT and creating a reason for a customer to suspend NEED / SAFETY / TRUST) becomes highly valuable.

21 - The finance professional who figures out how to balance an impossible cash flow problem while getting marketing resources to protect the future of the company becomes highly valuable.

22 - We'll never a salon worker or restaurant worker for granted again ... or at least for awhile. Those who take care of you should be taken care of as well. You may well tip differently, changing their compensation structure.

23 - And we'll want to think about what retail looks like in two years when we're done with rolling bankruptcies and we might even have a vaccine by then (maybe ... don't have one for HIV yet ... you never know with something new).

24 - Rolling bankruptcies and store closures mean less revenue for local government, which means reduced services are coming.

25 - It's just going to be really different.

Start thinking ahead now, and start preparing yourself now.

Think about NEED / SAFETY / TRUST. If we flunk NEED / SAFETY / TRUST, we have an exceptionally high WANT hurdle to get over.

Thanks,
KH