Canadian Retail Industry Seeing ‘Branding Crisis’ Amid Coronavirus Outbreak: Expert

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The retail industry is facing a “branding crisis” as major stores and owners of shopping centres have been slow to react in closing operations during the COVID-19 (coronavirus) pandemic.

Suzanne Sears, President of Best Retail Careers International, said the coronavirus has shaken the faith that Canada’s largest employer, retail, is worth investing in.

“The slow response of the malls to close, the slow response of the major retailers to close, has left a bit of a sour taste with a lot of employees. Yes, they’re catching up now but it’s almost a week or two too late,” said Sears, who is retained primarily by retailers for private searches to fill roles from the Executive to Sales Clerk level.

“So from a PR point of view it was a bad play. And it continues to be a bad play when the big players, the big mall owners, are not simply shutting down the non-essentials. More than anything else, there’s a branding crisis in retail – perception of retail as a valuable career.”

Sears said there are three segments of retail that always react differently to economic pressures. The first level is the luxury market. So much of the stock market value has been erased which is the type of consumer the luxury retail market targets. We may well see a downtick in the luxury segment.

The second level is the mid-range with mostly fashion and impulse items targeted to what is left of the middle class. A lot of that too is impulse buying. Sears said it remains to be seen how this segment will do in the sense that demand will still be there if there is enough people to buy it.

The third level is the discounters will likely have their best next two years ever seen in the history of retail, added Sears.

“There will be a big upsurge in that level of staffing” she said. “On the whole as it washes out, I think retail won’t be all that much changed from the way it looked before. Prior to this crisis, mostly every significant metropolitan area was at full employment or in the case of B.C. and Quebec under-employed. Meaning not enough people to fill the jobs.”

Sears said some economists are predicting the unemployment rate in Canada to rise by two percentage points in the short term. But retail was already under-staffed so if there is another two per cent shrink that would simply mean as many people want to hire and people who want to work in retail will basically be even.

“So I don’t think in any way, shape or form you’re going to see the death of the retail employee. I don’t think so. In a couple of months, it will be pretty much the same,” explained Sears.

She said some baby boomers employed in the industry may decide it’s finally time to retire. On the other end of the spectrum with new people coming into retail, this becomes a little more difficult because retail has been bashed all year long before the coronavirus and stores closing.

“So your best and brightest, be they tech, supply chain, design, they’re not entirely enticed because they’re not convinced that retail is a secure career,” said Sears.

Michael Kehoe, owner and broker of Fairfield Commercial Real Estate in Calgary, said coronavirus is the black swan of 2020 and for many retailers around the world, the COVID-19 outbreak is now a reality rather than a looming threat.

“In addition to protecting public health, industry cooperation is absolutely critical to supporting retailers and their employees. As retailers send their teams home there are many unknowns currently with respect to the duration of the crisis and how governments plan to compensate retail employees. In Canada, shopping centres and retailers alike must face a new reality with the goal of preserving the retail sector over the mid to long-term and entice retail sales staff back to the fold when this is over,” said Kehoe.

“Retailers are the heart and soul of the country and when times are challenging, governments, lenders, developers, mall operators and all retail real estate landlords must find solutions to assist retailers so they can assist their employees. Internationally many landlords have issued a waiver of rent for all food service and retail tenants for the upcoming months, some mandated by their national governments. The drop-in business activity, supply chain disruptions, curtailment of business and tourist travel are just some of the challenge’s retailers are facing. In some ways, business mirrors biology. As Charles Darwin surmised, those who survive ‘are not the strongest or the most intelligent, but the most adaptable to change’.”

Kehoe said retailers will have to be quick on their feet and examine their employee headcount and many have concluded that given all of the above stress points on their finances that this might be the time to evaluate critically whether they can do more with less manpower and raise productivity when things return to a new normal whatever and whenever that will be.

“As the situation progressively returns to a new normal and it will, the retail employee / employer and customer relationships will have been significantly altered. Leadership teams in retail need to plan for the eventual recovery. Operationally, the return to a new normal won’t happen overnight. Companies need to think about how they’ll gradually wind down resources, ramp up again and internalize the lessons learned during the coronavirus outbreak. This will serve as a template for responses to other external shocks in the future, ranging from new pandemic threats, economic downturns, terror attacks and natural disasters. Retailing will be forever changed as e-commerce is sure to fill the gap during these unprecedented times,” added Kehoe.

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