MMR: Mass Market Retailers, June 22, 2020

Business Takes On Societal Challenges By Jeffrey Woldt Outrage over the killing of George Floyd while members of the Minneapolis Police Department were taking him into custody extends to corporate America The CEOs of Target Kroger Albertsons Cos Hy Vee CVS Health and Walgreens Boots Alliance along with other retail executives and their counterparts in a variety of industries have condemned the incident called for justice and racial equality and reiterated their commitment to diversity Following days of nationwide protests Walmart president and CEO Doug McMillon speaking in his role as chairman of the Business Roundtable said Our employees customers and communities are looking to us to act now Having spoken to many CEOs of Americas leading businesses I know they share my conviction that this is a time to act to address racial inequality This pain our country is feeling should be turned into real change The associations board formed a special committee to examine what companies can do to help address long festering issues brought to the forefront by Floyds death and many businesses are launching their own initiatives To cite just one prominent example Walmart as part of a broader commitment earmarked 100 million over a five year period JEFFREY WOLDT OPINION Editor in Chief Vice President Phone 212 699 2326 jwoldt@ racherpress com SCOT MEYER Executive Editor Phone 212 699 2312 smeyer@ racherpress com MARK BAUMGARTNER Senior Editor Phone 212 699 2334 mbaumgartner @ racherpress com LESLIE SELDIN Desk Editor Phone 212 699 2389 lseldin@ racherpress com SUSAN SCHINITSKY Secretary Treasurer MARK WOLZ MMR to fund a new center for racial equality This isnt the first time the business community has taken on societal challenges In recent years the urgent need to reverse the process of climate change and other environmental concerns have regularly been factored into the long term strategic planning of major corporations and the private sector has emerged as an indispensable partner in the ongoing battle to contain and end the COVID 19 pandemic Retailers distributors and CPG companies food and medicine moving during the lockdown manufacturers have switched some factories over to the production of ventilators equipment and the pharmaceutical industry is in the midst of an unprecedented drive to develop safe and effective treatments and vaccines to counter the novel coronavirus In the absence of effective political leadership its heartening to see business leaders broaden and deepen their involvement in such crucial matters as racial justice and the response to the COVID 19 pandemic The practical results oriented thinking of the people who know how to run large companies should be an invaluable asset as we try to hammer out solutions to our most pressing problems Copy Editor Phone 212 699 2330 mwolz@ racherpress com BILL BUCKLEY kept essential supplies of and personal protective Art Director Phone 212 699 2331 bbuckley@ racherpress com STEPHANIE THOMPSON Art Director Phone 212 699 2323 sthompson@ racherpress com PEGGY NAVARRE Production Manager Phone 212 699 2371 pnavarre@ racherpress com Published by RACHER PRESS INC 126 Fifth Ave 12th Floor New York N Y 10011 212 213 6000 Fax 212 725 4594 JOHN DIOGUARDI Vice President Sales Marketing Phone 212 699 2361 johnnyd@ racherpress com PAM VANDERNOTH Circulation Subscriptions Director Phone 212 699 2362 pvandernoth @ racherpress com VOL 37 NO 7 June 22 2020 DAVID PINTO President SUSAN SCHINITSKY Publisher The Time to Return to Work Is Now By David Pinto To loosely quote a memorable Martin Luther King passage We face some difficult days ahead Perhaps no words more accurately capture the current situation facing the nations mass retailers The notification hardly surprising given the current state of the industry that the National Association of Chain Drug Stores has been forced to cancel its annual Total Store Expo puts an end bracket on the summers NACDS calendar In so doing it also effectively brackets the mass retailing April to August conference season which this year began with the cancellation of the Annual Meeting leaving a void that will be difficult but not impossible to fill Indeed it is safe to say that no event has more appropriately highlighted the role the chain drug association plays in this industry than the twin announcements that these two signature events perhaps the most meaningful in all of mass retailing would not take place this year NACDS is hardly at fault here Faced with obstacles no association could reasonably be asked to surmount concluding with the announcement that the state of California would not effectively reopen for the business of convention going until September the association took the only action open to it The toll on the organization and the industry it serves though staggering was perforce only a secondary consideration In short NACDS acted in the only logical way it could choosing the lesser evil among a minefield of serious hazards However thats now ancient history and it falls to the mass retailing industry to lick its wounds pick up the pieces cease the unreasonable though understandable activity of blaming NACDS for its perfectly logical decision and get on with its business That means several things both for retailers and the suppliers who have come to rely on Total Store Expo to provide the merchandise and merchandising to carry the industry forward for the next 12 months First the Expectations are for retailing to be the engine that drives the economy absence of this critical merchandising event should in no way call a halt to the interaction between retailers and suppliers America is slowly returning to normal That means that as the summer progresses it will become easier more efficient and more productive for retailers and their supplier partners to meet Thats not as simple as it sounds Suppliers for their part are accustomed to travel though that travel has been sharply curtailed in recent months For retailers who have been forced to hunker down during the pandemic that has swept the country this year reopening their eyes their ears their checkbooks and the visionary approach to business that has served them so well for so long will be more difficult It has become deceptively easy for the mass retail community to slow down to treat the coronavirus as a reason to put business second to worry first about family neighborhood community It is now paramount to reverse that thinking to once again put business first at least in the near term Its time to recall what mass retailing has traditionally meant to America Simply put it is what Americans do where Americans go what Americans look forward to Naysayers to the contrary Americans fully expect and certainly hope that retailing in America will once more and quickly become what retailing in America has always been the engine that drives the economy and the country So the time to return to work is now Now is the perfect time to support the chain drug store association that has always supported the mass retail community Now is the time for the mass retail community to work with and support the supplier community to return the confidence that suppliers have traditionally expressed in doing business with their retail partners In short and in summary now is the time to return to work to once again open the doors not only to customers but to business as usual It is what American retailers have always done And it has always worked COVID 19 Puts Spending at Risk By Scot Meyer Retailers are understandably wondering what consumer behavior will look like as the economy opens up again Will people venture back to stores and restaurants or will they still be afraid that they could be exposed to the novel coronavirus Will those who have tried online shopping for Study It may take years to replace the jobs lost in a matter of weeks the first time during the early days of the pandemic decide they prefer to shop that way even when other options are available Will product preferences be changed by peoples experience of sheltering in place at home wearing comfortable clothes and baking their own bread Perhaps a more important question for retailers to consider How many consumers will still have money to spend A recent study by SHRM Society for Human Resource Management and Oxford Economics estimates that U S workers had lost an estimated 13 trillion by late April as a result of the economic contraction caused by the COVID 19 pandemic That amounted to an average of about 8900 per worker The studys authors state that about 20 of this 13 trillion figure represents lost income by people who were still employed So job losses significant as they are are not the only threat to consumer spending going forward Thats a big deal because consumer spending is estimated to account for about 68 of U S gross domestic product Job loss and wage reduction have cost United States workers 13 trillion as of late April and this amount has surely grown in lockstep with rising unemployment said Dan Levine head of Oxford Economics location strategies practice In many communities it may take years to replace the jobs lost in a matter of weeks The study also predicted that only 20 of metropolitan areas and only 11 of smaller communities will see employment return to pre pandemic levels by the end of the year The study also predicts that nearly four in 10 smaller communities will not recover to pre COVID 19 employment levels by the end of 2024 Those results may seem pessimistic especially after the Labor Department earlier this month released an unexpectedly positive jobs report indicating that the economy had added 25 million jobs in May after having lost 207 million jobs in April And while 15 million Americans filed for initial unemployment benefits in the first week of June that metric has declined steadily since mid March The broader unemployment rate remains about 212 though and many are predicting that a lot of companies will be slow to rehire laid off employees preferring to wait until their business picks up first That makes sense But if companies wait to rehire and the stimulus money stops flowing many consumers will not have as much money to spend in retail stores Given the importance of consumer spending that would be bad news for the economy MMR June 22 2020 23