Q-and-A: What post-COVID shopping shifts will stick in Northern Nevada?

Bryan Wachter, senior vice president at the Retail Association of Nevada.

Bryan Wachter, senior vice president at the Retail Association of Nevada. Courtesy Photo

A month ago, Nevada dads received plenty of new coffee mugs, fishing gear, socks, tools and more. After all, shoppers across the Silver State were projected to spend a record $319.4 million in retail sales for Father’s Day, the Retail Association of Nevada (RAN) reported June 10.

It was a microcosm of the rebound retail has been enjoying since the economy in Nevada and beyond reopened.

In June, the National Retail Federation said it expects retail sales to jump between 10.5% and 13.5% to more than $4.44 trillion in 2021 compared to last year. That’s nearly double the forecast the trade group gave in February, when it predicted between 6.5%-8.2% growth.

Despite the sunny forecast, retailers face headwinds — from inflation to congested ports to a shortage of workers. Plus, it’s unclear how consumers’ wallets will shift to services and other spending priorities, such as hotel stays, plane tickets and dining out, instead of on consumer goods.

To zoom in on Nevada, the NNBW caught up with Bryan Wachter, senior vice president at RAN, to talk about pandemic-driven changes in consumer behavior, retailers’ lingering challenges in 2021, how brick-and-mortar businesses can compete in a post-COVID marketplace, and more.

Q: How would you describe the state of retail in Nevada right now?

Bryan Wachter: We’re very optimistic when it comes to consumer confidence; we’re optimistic when it comes to consumer spending. We are struggling to find employees, whether it’s our restaurants or grocery stores. This is after most of our retailers have increased their minimum wage, and increased the benefits, but we are still finding a lot of holes in our labor market. And that’s leaving some problems for retailers.

Some retailers have to shorten hours; they’re not able to open as long as they traditionally are; maybe they’re not able to serve as many customers as they can normally serve or as their business plan projects. All of those things are weighing down the retail industry at the moment, and that is something that we’re having to explore.

Q: What about supply chain issues?

Wachter: A lot of our businesses are experiencing supply chain problems, whether it’s outages, whether it’s manufacturing, whether it’s because the ports are backed up for three or four weeks. We’ve had a lot of COVID and non-COVID weights hanging on the supply chain.

We were able to keep it running when it was very important, when we were getting in those necessary items when folks were quarantined and staying home, but certainly the stress of running the supply chain like we had for the last 15-16 months is making itself apparent.

We are constantly struggling with products that we can’t get in or keep on the shelves. The customers are doing what they can to find those products, and that is really changing consumer behavior, so retail is constantly adapting to that change.

Q: Speaking of that, how has the pandemic changed consumer behavior patterns? Do you see these changes being permanent?

Wachter: I think we are 
at the point where we’re starting to really be able to differentiate between some of the changes that were temporary and some of the changes that are permanent given the pandemic.

For instance, the digital conversion ... a number of folks are more than willing to have food delivered, have groceries delivered, even beyond the typical things we saw pre-pandemic. Folks are engaging; they’re on those online platforms, so that conversion time — something that should have taken a lot more time to get folks involved on those digital platforms — happened in the course of 30 days as opposed to the three to five years that we would’ve expected it to take.

Because of that, some of those things are going to be a permanent part of how consumers interact with retailers and business owners. Retailers really had to over the last 12-18 months figure out what that’s going to look like. So, we’re in this trial-and-error season at the moment, where folks are a little bit more flexible, and have been during the pandemic trying new approaches, trying new channels, trying new outreach avenues.

We’re starting to see which ones work, which ones people were readily adapting and which ones folks didn’t adapt to. I think we’ll start seeing condensing of some of those options and offers and really honing in on the major ones consumers really jumped to.

Q: What are some of the things consumers seem to be latching onto and are sticking?

Wachter: I think when it comes to delivery time — what can we deliver and how quickly? I think that is something that consumers are now expecting, that same day delivery, especially when you order groceries in the morning and they’re delivered to your house in two hours. We’re starting to see even more erosion away from that one-day shipping to ‘I want it immediately.’

In that same feeling, the pick-up at the store or the drop-off or return at the store, those things are likely to stick around. It’s interesting how multi-channel businesses are incorporating those types of things into their everyday store experience. A good example of that is Amazon and Kohl’s. In Kohl’s department stores, you can bring back any return that you might have for Amazon and you can drop it off, and they’ll consider that returned. And then Kohl’s prints you a coupon immediately and they’re going to try to entice you to stay in their store and hopefully spend some money. That’s an example of the return policy for an online marketplace driving innovation in a brick-and-mortar retailer that doesn’t perhaps have the reach that Amazon does.

So, we’re starting to see a lot more of those kinds of partnerships and those same interactions among different retailers, when they’re not competing with each other, providing that customer with a different, more efficient experience, and with a potential new retail opportunity.

Q: Do you see retailers making heavier investments in order fulfillment and last-mile delivery?

Wachter: I think final delivery is always going to be the biggest challenge in terms of transportation. I kind of laugh that it’s easier to get something from China all the way to a Reno distribution center than it is from the Reno distribution center to Vegas.

But we’re always going to have that last-mile issue. But we started to see drone capabilities and new delivery systems come online. We have AI-driven vehicles that are now legal in Nevada. So, you could have your groceries delivered by a vehicle that doesn’t have a human in it at all. And then with drones, we had a great trial program with Walmart at their store on Craig Road where they were delivering at-home COVID tests via drone to anybody who lives within a few0mile radius of the store.

When we’re talking about that last-mile delivery innovation, there is still going to constantly be improvement and we could start seeing that last-mile delivery happen with robotic cars, and certainly with drones. That’s the next step.

Q: Do most retailers expect a continued increase in demand for digital engagements moving forward?

Wachter: I think we're entering a period where if you don't have that, it is going to be unlikely that you’re able to compete in the retail world, in the retail space. It cannot be an afterthought anymore. You really have to look at that omnichannel retailer and how they get products to consumers, when and where those consumers want those products.

Is that the internet? Is that your mobile phone versus your computer? Is that drive-thru? They have to be able to match and meet all of those expectations. I would caution that for the retail industry, it’s not so much, are you good at that? It’s how are you combining all of those different streams into one business plan going forward?

And the firms that can do that really well are the firms that are going to be successful, and the firms that don't are going to be the ones that end up closing and allowing new retailers to move into those spaces.

Q: Has the pandemic pushed retailers to increase their focus on storytelling and narratives and a more engaging experience through social media?

Wachter: It’s something you have to be a part of in today’s marketplace. I think retailers are very cognizant of their brands of their products. I would say that consumers are more informed and engaged on the individual product or type of products and the companies involved in their narrative. Customers are looking for companies that represent — or at least don't contradict — their individual values.

They are more engaged and educated customers, and retail is constantly matching that new consumer demand and change in consumer behavior. That’s one of those changes — customers are looking for those narratives and looking for information about the company and its products, and companies have to be able to give those customers what they’re looking for.

Note: This interview has been lightly edited for length and clarity.


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