After writing about the need for law firms to establish an industry focus for some time, I received the following question recently from an industry group leader:
I have been following your stream of articles on the merits of having Industry specialization — which I agree with. But what happens if the industry that you happen to have selected, like retail, is now being decimated by the coronavirus pandemic?
Retail is among a number of industries that are experiencing severe stress, previously from the trade wars and now largely due to the shuttering of many brick-and-mortar stores due to the ongoing pandemic. Indeed, we are currently witnessing something akin to collapse in the clothing apparel retail segment, with J.Crew, Neiman Marcus, and Bergdorf Goodman all filing for bankruptcy. While these business failures appeared to result from a dramatic and immediate reduction in demand, other factors were largely observable and predictable to anyone monitoring developments in the retail industry.
So, in response to the industry group leader’s question, my follow-up would be:
Have the members of your industry group monitored and discussed (especially during monthly industry group meetings) the evolving trends that are impacting their chosen industry?
Along that same theme, here are a few strategic recommendations that I would offer to any industry group:
Always be monitoring emerging trends in your chosen industry
If your group has been monitoring trends, you would no doubt have seen that for some time now we have been living in a world where digital dominates every aspect of business — and the retail industry is no exception. Advances in science and technology; the moves of major online competitors like Amazon; and the changing way that goods are produced, shipped, shopped for, and sold has been dramatically transforming the retail customer experience. Indeed, these same factors have been impacting the retail industry for some time, in large part because retail has been slow to embrace this technological revolution.
Your team should be looking to other sources of industry trends — like Deloitte’s Annual Consumer Change Study where your group members can learn about where retail consumers are going to shop, how they are spending their time, what matters most to which demographic and income groups, and how the industry’s competitive market is changing.
Be vigilant in how the application of new technologies will transform your industry
Retail has been ushering in a new frontier known as retail tech for some time now, and this should be an area with which any law firm focusing on the retail industry should be familiar. So, another follow-up question I have is:
Have you specifically identified ‘retail tech’ as one of your areas of niche specialized expertise?
The ways that the more traditional retailers have been changing customers’ experience have included such innovations as cashier-less checkouts, where you can take products off the shelf and walk directly out the door as computer vision combined with digital payments make sure the right customer is charged for the right purchase. Given the additional pressures on the industry due to the pandemic, expect many more industry participants to increasingly explore different ways to enhance and improve the shopping experience. In fact, already such innovations as automation enabled by robotics, artificial intelligence, drones, chatbots, are helping nimble startups scale-up quickly and compete with incumbents faster than ever before.
Further, more cutting edge innovations are being used — such as virtual and augmented reality that allows for virtual dressing rooms both in the stores and in your home; and body scanning to produce exact measurements, and 3D printing to produce garments in real time based on your exact measurements and specifications. In fact, shoe manufacturers such as Adidas have already been testing this with running shoes.
Given this level of innovation, my question now becomes:
Will you be familiar enough with these new technologies and the potential legal issues that may be involved for your clients as they utilize these advances?
Be cognizant of how all industries eventually “fracture” into multiple micro-niches as they mature
The retail industry may have had its origins in brick-and-mortar stores where consumers went to purchase their food, clothing, personal items, and furniture. And as impactful as e-commerce had been, it still represented less than 15% of U.S. retail sales. (That, however, was before the coronavirus showed up.)
Today, the retail industry is comprised of dozens of different micro-niches which today, especially with new social distancing restrictions in place, include a diverse selection of companies are trying to improve online shopping. A number of these micro-niches within e-commerce are gaining increased traction as a huge number of consumers shift online. Not surprisingly, digital platforms for wholesale groceries, autonomous delivery robots, and tools for real-time data collection and analysis are growing apace.
Other retail micro-niches include platforms focused on helping wholesalers or small businesses sell their products online; “resale and rentals,” which includes companies dedicated to the resale of refurbished electronics as well as resale of fashion, books, and miscellaneous items; and the rental enterprises to handle transactions as diverse as art and camper vans.
With this explosion of retail-related micro-niche activity, my question then becomes:
Have you compiled a list of these various retail micro-niches and specifically identified those where your group members may have already had some experience in working with their clients and those that are likely to experience growth post-pandemic?
Identify those specific issues most in need of your specialized expertise
In this hyper-competitive online environment, retailers and shopping centers are drastically trying to cope with a demand that overwhelms their website capacity and therefore are desperate to upgrade their e-commerce sites.
Meanwhile, privacy and governance are critical concerns when it comes to collecting and using consumer data as the financial and reputational consequences of any data breach can be enormous. And coming out of this pandemic, we will be entering a radically different retail world of long-term social distancing rules and nervous customers afraid of contracting the virus.
These clients will need your group’s guidance on everything from managing consumer data safely to navigating state-imposed lockdowns and avoiding litigation risks. Further, clients will need advice on handling negotiations with creditors, effectively reopening their brick-and-mortar stores, and dealing with new regulations. And this doesn’t even touch on the number of your clients that will need legal help with restructuring, recapitalization, and even bankruptcy. This is where your group has the specialized industry expertise to be seen as a trusted advisor.
Finally, ensure that your group “pivots” to position itself as serving selective micro-niche growth areas
Industry groups have an inherent advantage: they can build brand loyalty and authority by focusing on selective micro-niches in which they can build a dominant presence. Clients are likely to favor those firms where they can find the expertise that they need.
Then, once authority is established over a niche domain, it can serve as a strong and wide competitive moat to keep other law firms at a competitive disadvantage.