Trying to figure out how much business we might do after reopening requires that I step outside myself, try to see the situation clearly and objectively.
What do we know?
Well, we know:
1.) Tourism is unlikely to come back in any significant way, at least for a long time.
2.) Tourism is a large percentage of our summer business, therefore, we have to order in numbers that reflect that drop.
3.) The store is well stocked. We aren't in catch-up mode, so we can afford to take a wait and see attitude. Once we order, it's nearly impossible to reduce orders. On the other hand, if we don't order, we can always do it later.
4.) Most of our overhead is fixed, so the only way to reduce expenditures is to be careful with the product.
5.) Most sales occur in the top 20% of product (the 20/80 rule). We start by ordering the essential product. The way I put it is this: instead of asking, "Will this product sell?" we ask, "If we don't order this product, will anyone notice?"
6.) It's best to do this kind of moderating early, because playing catch-up is nearly impossible.
With cold clear eyes, I think a a 20 to 30% drop in sales from yearly average is almost guaranteed. That means, the drop will be even more severe during the summer. I believe there will be an initial surge as people rush to get out and try to support their local businesses. But that surge will happen no matter what we have coming in.
But after a month or two, I think it will settle down to reality.
We can monitor from day to day, and adjust upward as necessary. I think this is going to be harder than most people believe, because a huge chunk of money is being taken out of large segments of our society, (for instance, airlines, movie theaters, sporting and entertainment events, etc.) and that has to affect everyone else. Especially in Bend, tourism is important for hotels, restaurants, and shops.
The temptation is to just pick up where we left off, but I can't see that as possible.
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https://www.theatlantic.com/ideas/archive/2020/04/how-pandemic-will-change-face-retail/610738/
Not exactly an uplifting story, and I think maybe a bit of questionable speculation in there. But I think it's asking some interesting questions.
How did things go after SARS and MERS in Asia? I wonder if that is any guide for us.
The airlines are screwed. It was a big mistake to bail them out because we need a different business model post COVID-19. The aircraft manufacturers as well. Business travel will drop precipitously now that we know its not nearly as necessary as it used to be. That's going to impact hotels as well. I think tourism will come back -- and the hotels, airlines etc. will have to cater to the regular consumer rather than the person with the corporate amex. That's going to require different ways of doing business.
I'm interested to see what happens with restaurants and retail. While still necessary and needed -- they're going to realize they don't need as much physical space as they did.
I'd be tempted to say its all doom and gloom, but I also know that life can change right out of left field. Really all I can say is "we'll see", and we'll have to adapt as best we can.
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