WSL Future of Health Event

Shift needed to jolt industry

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The quiet year continues. Mass retailing has changed, but only insofar as new faces have replaced the old and new formats have come along to challenge existing ones. The major players remain in place, and new retailing forms have thus far not disturbed the balance of power.

This is not to say that retailing is what it was. Far from it. The leaders continue to lead, and the followers to follow. But much of the dynamism has gone out of the mass retailing community, primarily because the major retailers have seen sales and shopping trips soften.

Most industry people willing to guess at the cause point to digital retailing, a segment unknown a few short years ago that has of late taken the play away from brick-and-mortar retailers. And, though traditional retailers are scrambling to get back on track, they have thus far made very little progress.

A secondary cause is the emergence of new retailing types, specialists who emphasize one retailing segment at the expense of the broader merchandise assortment. These specialty shops have siphoned off shopping trips from traditional mass retailers — and to this point old-line companies have had little success recapturing that customer.

The result thus far has been an anemic sales performance, and a resulting flattening of earnings — not a situation brick-and-mortar retailers are accustomed to or comfortable with.

Traditional retailers are scrambling to recover — by tinkering with their merchandise assortments and store formats, adjusting prices, adjusting the categories they feature and emphasize, and experimenting with new prototype stores. But nothing to date has nudged the needle to any significant degree.

The one retailing segment that appears to be weathering the storm is the grocery segment. This is especially apparent among regional grocery retailers, whose business is holding up nicely despite new kinds of competition. But even here there are new hurdles to overcome. Most recently, Whole Foods Market Inc., faced with emerging competition in the fresh and organic categories, has reorganized its board, and it claims to be addressing the issues that have plagued it of late.

What’s needed, say many industry people, is a shift in the current state of the industry, something that would alter the dynamics and realign the competitive marketplace. One example they cite is the long-delayed completion of Walgreens Boots Alliance Inc.’s acquisition of Rite Aid Corp., a transaction that has been put off by the government’s delay in issuing parameters on the disposal of stores WBA would be liable for should the transaction go ­forward.

Failing that, little evidence exists for a shift that would shake up an industry that has, in a short period of time, become mired in its own lifelessness, its own inability to get out of its own way. Compounding matters is the sense that many of the industry’s biggest players — WBA, CVS Health, Walmart, Target Corp. — are on the verge of breaking out of the pack, of charting new directions and exploring new growth ­opportunities.

WBA certainly has the ability to break out on a global stage, combining the retailing expertise exemplified by its U.S. drug chain with its wholesaling leadership position that exists globally to create a global empire. And CVS, for its part, despite the growth issues that currently plague it, is nonetheless the global leader in retail health care accessibility, awaiting only some fine-tuning to roll out its full potential.

Other mass retailers are in similar situations. Walmart has certainly recovered much of its momentum, and appears to be headed to a full recovery, at least insofar as the newly energized retailing community will allow. And Target, for all its troubles of late, still retains the confidence of many in the retail community — those who remember what Target once represented and, with the right measures going forward, see what it might represent again.

So retailing is on the brink — of what remains to be seen. The second half of the calendar year might mirror the first half in terms of progress and excitement. Or …


ECRM_06-01-22


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