Retail Industry Challenges

$1.7 billion in market value wiped out in just three weeks - all due to one #ransomware attack. One of Britain’s largest retailers, Marks & Spencer (64K employees, ~1500 stores, ~$17B revenue) is still reeling from a cyberattack by the DragonForce ransomware group. It started Easter weekend, was publicly confirmed on April 22nd. We're now weeks into it and they still can’t process online orders or accurately track store inventory. Deutsche Bank estimates they're losing ~$19M per week in profit. According to BleepingComputer, DragonForce gained entry through social engineering, tricking IT helpdesk staff into resetting credentials. This wasn't and isolated incident, the group also targeted two other UK retailers - Co-op (~70K employees) on April 30th and Harrods (~4K employees) on May 1st. Personal data of millions of customers and employees has been exposed. #IT teams are sleeping in offices, and employees now keep cameras on during virtual meetings to verify identities. These attacks mirror the Caesars and MGM 2023 breaches attributed to Scattered Spider. The cybersecurity industry must evolve - we need stronger solutions around identity management, phishing defense, incident response, and backup #resilience. If you're a founder working on new solutions to break this cycle, I'd love to connect.

I’ve spoken with 20 searchers who acquired a business that failed. Here’s the #1 reason why they failed 👇🏼 The seller: ⛔️ Lied ⛔️ Knowingly withheld critical information ⛔️ Made incorrect statements on the purchase agreement and/or representations and warranties. None of these things were not caught during due diligence- even after a Quality of Earnings (QoE) review. In retrospect, many of these issues could not have been identified before the acquisition. 💡REMINDER💡 The seller will always know WAY more about the condition of the business than you as the buyer ever will. There are 29 million small businesses in America. Do a deal with an seller you can trust.

US retailers have announced more than 7,100 store closures through the end of November 2024. That’s a 69% jump from the same time last year. It’s easy to blame the economy for this. And it’s easy to blame online. And neither of these things should be completely dismissed. However, when you get under the skin of the closures it’s obvious that the primary cause is usually the age-old failure to align with demand. Propositions might not be right. Offers might not be what consumers want. Retailers might not have responded to competitive threats in the right way. In other words, a lot of the closures are self-inflicted injuries. Family Dollar, which tops the closure list, is a case in point. It’s a value chain that’s not all that good at providing value. The same goes for Big Lots. Both retailers fell at the first hurdle, so it is hardly surprising consumers have gone elsewhere. And so, the list goes on. The point also needs to be made that while closures are very distressing for those affected, they’re not actually a bad thing. Weak chains should clear the decks for stronger players – and that’s been a perpetual feature of the retail sector for as long as it has existed. And of course, as well as the closures, there are many chains expanding and thousands of new openings. I shared some of my thoughts with CBS News in the article linked in the comments. #retail #retailnews #stores #physicalretail #ecommerce #economy

The numbers show just how hard retail pharmacy is getting. Even if you’re one of the biggest and most efficient pharmacy operators. Put aside Walgreens’ strategic missteps (e.g., retail health and VillageMD) for a moment and consider its pharmacy track record over a 10 year period, 2015 to 2024, per its 10-k's: Pharmacy revenue per store: $6.5M → $10.4M (+59% growth) 30 day prescriptions per store per week: 2,101 → 2,751 (31% more volume) Total retail revenue: $80.8B → $115.8B (43% growth) Revenue per 30 day prescription: $59.74 → $72.46 (21.3% growth) Total 30 day prescriptions dispensed: 894M → 1.2B (37% growth) All metrics heading in the right direction! So where are the problems? Pharmacy gross margins: 22.9% → 12.7% (!!!) Pharmacy gross profit per 30 day adjusted prescription: $13.69 → $9.23 30 day prescriptions as % of total prescriptions: 81% → 65% Front store revenue per 30 day prescription: $30.64 → $21.94 There’s a lot going on here, but a primary part of the story seems to be: for much of the early 2000s, pharmacies made up for declining reimbursement for brand drugs through higher margin generics. And then PBMs started ratcheting down reimbursement for established multisource generics (and overall through various mechanisms), pharmacies were able to at least fight back as new generics were introduced. But generic dispensing rates started to hit the ceiling (~85%) in the mid 2010s, so pharmacies made another well-intended bargain: more 90 day prescriptions. Lower margin, but addresses non-adherence and does bring in more upfront gross profit and revenue. The problem is that if people only come to the pharmacy every 90 days (vs every 30), spend in the front store goes down as well. The truly scary part: Walgreens averages $13.5M total revenue per store. The average independent is at ~$5M, per National Community Pharmacists Association (NCPA) Meanwhile, CVS Health’s PBM division generated $7.2B of operating income, accounting for roughly 60% of total income for the $373B revenue company in 2024. How can pharmacies survive?  Maybe vertical integration with PBMs and payers, like CVS Pharmacy, but that brings its own set of issues. Maybe expansion of clinical scope of practice, something that DocStation enables and CPESN Networks is doing in North Carolina to great effect. Maybe through technology and artificial intelligence. Maybe through service innovation such as prescription delivery, a la Capsule. But it’s hard for me to see a sustainable path forward without addressing adequate reimbursement and addressing the power imbalance between pharmacies and PBMs. Which is a shame, because pharmacists are perhaps our most underutilized, trusted and highly trained clinicians who could be doing so much more. What else is needed? And what am I missing? Adam Fein Samm Anderegg, PharmD Troy Trygstad Tony Schueth Pooja Babbrah Antonio Ciaccia Douglas Hoey #Pharmacy #RetailHealthcare

How can retailers activate in-store experiences that can scale efficiently and measure incremental impact? 🤝 In-store media requires cross-functional collaboration across marketing, merchandising, and retail media teams. Merchant alignment is essential to ensure in-store media supports broader category goals, promotions, and pricing strategies. However, fragmentation between teams often leads to inconsistent execution. 💰 High upfront investment in digital screens, infrastructure, and maintenance makes scalability a challenge. Retailers must balance technology costs with expected ROI. Additionally, ensuring planogram compliance and optimizing store layouts for maximum visibility and shopper impact requires coordination across teams. 📊 In-store media success is evaluated through POS data, sales lift analysis, customer sentiment surveys, and match market tests. These methods help brands understand the impact on purchasing behavior, optimize budgets, and refine in-store strategies. 🐢 Crawl Phase: Retailers should pilot technologies, gather initial data, and build a scalable business model while training teams and refining measurement approaches. Early-stage collaboration with merchants ensures that in-store media aligns with overall store operations and merchandising priorities. 🚶 Walk Phase: Use data insights to optimize content, improve store-level targeting, and scale successful pilots. Refining planograms and integrating in-store media with category management strategies help maximize effectiveness. Introduce advanced features like interactive displays, mobile integration, and AI-driven recommendations to enhance engagement. 🏃 Run Phase: Fully integrate online and in-store strategies to create seamless in-store experiences that can measure omnichannel impact. Collaborate closely with merchants, store operations, and category managers to ensure store layouts, promotions, and digital touchpoints work together.

When I worked at Hallmark, I was involved in many brand and innovation projects, where I learned that people are very predictable! The factors we consider when engaging in or purchasing from a brand haven't changed much fundamentally, although the manifestation of those factors are different than they were 10-20 years ago: 1. VALUE: Do I feel good about what I get for what I give? Challenge: Low-cost options abound and many are "good enough." There are fewer product types consumers feel precious about these days, especially younger consumers who are accustomed to the Temu and Shein versions of everything. If there's not added value, like a great experience, forget it. Workplace equivalent: Am I getting paid and appreciated for the work I do? Is my experience enhanced? 2. CONVENIENCE: Is it easy and efficient for me to engage with you? Challenge: We've been dealing with online shopping for a long time now, but same-day delivery and free shipping create major barriers to entry for the little guys who seek to compete on this dimension. Subscriptions help counter this, but they require consumers to think ahead (and to think of you when they think ahead). Staying top of mind is expensive. Workplace equivalent: Do I have the flexibility I need? Am I free to work in ways that maximize my output? Am I facing unnecessary barriers? 3. AFFINITY: Do I feel emotionally connected to your brand and/or solutions? Challenge: Today, this is both quicksand and a rocket ship. Consumers move swiftly to boycott if they don't like your positions or decisions, and social media spreads negative sentiment like wildfire. At the same time, they'll support you with their social capital and money if they DO like your positions and decisions, and that spreads like wildfire too. Workplace equivalent: Can I trust you to be who you say you are, and does that align with how I see myself? When I talk about you to others, am I amplifying good or bad traits? 4. STATUS: Does being associated with your brand and/or solution give me credibility or make me feel good/important/enriched/happy? Challenge: Trends cycle faster now, and the more polarized we are, the more powerful #1 and 3# become. For increasing numbers of people who may feel discarded or disenfranchised, feeling valued and aligned overshadow the desire for status. If you're not there for them, they don't want to be there for you. Workplace equivalent: For many professionals, the days of caring more about working for a big brand than working for a good company that sees, respects, values, and protects them are behind us. They tried that and learned the hard way that bigger does not mean better. Interesting times, indeed. What consumer drivers did I miss? And how do you see them differently today than in years past? #marketing #consumer #brands #products #retail #wearethewaymakers #betheway #thewaymakerschangegroup #leadership #workplacewellness #culture #consumerinsights #employeeinsights

Don’t be the dumb money. When trying to acquire a company, there can be a lot of frustration. We are looking at dozens, if not hundreds, of businesses. When we find one that is interesting, it doesn’t always work out. You can see why buyers get excited when they find a fit and the pieces start coming together. This can create a frenzy, causing the buyer to overpay for the acquisition. One of the most common reasons that acquisitions fail is because of overpaying. When we acquire a business, our valuation should focus on its historical performance. A seller may try to sell a buyer on the future of the business. This can range from something as simple as pointing to all the work the business has in the pipeline to something more speculative, like future cash flow projections. Anyone who has run a business knows you can’t count your chickens before they hatch, so adding potential future performance to a valuation is taking on added risk. Another way buyers overvalue a business is by overlooking potential issues. We may think we can fix these issues, so why should they impact our valuation? The problem here is that changes – even those for the better – are not guaranteed to have the positive impact we expect (or prevent the negative impact we are trying to avoid). I have heard others say that if you can grow the acquired business, the valuation doesn’t matter. Even if you pay $10M for a $2M business, it would still be a great investment if it returns $100M to you over the next 10 years. But what if it only returns $10M over the next 10 years? There will always be buyers with access to capital who don’t know what they are doing. They make poor decisions with their capital because they believe that the business they are acquiring will always see profits go up and to the right. These are the buyers who will become frustrated with the return on their investment, struggle to service the debt they took on, or have to deal with disgruntled investors. All because they were dumb with their money. We want to be smart when we deploy capital, even if that means walking away from a business we like. 

From poultry farms to apparel factories, recent years have underscored a common lesson: expect the unexpected. The bird flu outbreak in the food supply chain is a stark reminder of unpredictability and the fragility of even well-oiled supply systems. The #fashion and #retail sector’s disruptors – whether sudden (a blocked canal, a #tariff war, a viral hashtag) or systemic (ultra-fast competition, government policies) – have had similarly far-reaching and unpredictable impacts. In scale, these events are global and massive – a single shock (like the Xinjiang #cotton ban or SHEIN’s ascent) touches countless companies and consumers, just as #birdflu swept across dozens of states and countries, requiring a coordinated response. In unpredictability, they often emerge with little warning, defeating forecasts (few predicted canal blockades or a global pandemic, just as disease experts were stunned by the H5N1 flu strain). And in cascading effects, they set off chains of consequences – shortages, price spikes, shifts in labor and policy, consumer spending, bankruptcies, and #innovation spurts – that interact in complex ways. What’s the equivalent crisis for fashion and retail? Supply Chain – From the pandemic’s freight crisis (ocean shipping up 8X normal rates) to cotton shortages, we’ve seen how one missing link can cripple an industry overnight. Labor & Ethical Flashpoints – The U.S. banned Xinjiang cotton (20% of global supply) over forced labor concerns. Bangladesh’s recent wage protests shut down 500 factories. Disruptions like these force brands to pivot fast—or suffer huge losses. Regulatory Upheavals – PFAS bans, carbon emissions laws, and import restrictions are reshaping sourcing, much like how food safety laws changed poultry farming post-bird flu. Ultra-Fast Fashion’s Market Shock – Shein and Temu have rewritten the playbook. With half the prices of Zara and H&M and lightning-fast trend cycles, legacy retailers are scrambling to compete, much like how alternative proteins gained ground when eggs became unaffordable. Economic & Consumer Shifts – #Inflation has reshaped shopping habits, while resale and sustainability concerns have pushed consumers toward thrift and rental models. Just as bird flu made shoppers rethink food security, fashion’s upheavals force brands to rethink resilience and agility. Yet, with #disruption comes #adaptation. The bird flu crisis spurred new investments in biosecurity and diversified sourcing of eggs (including vegan egg alternatives), increasing resilience. Likewise, the fashion industry’s upheavals are prompting a reimagining of #supplychains – from near-shoring production to investing in transparency #technology – and a rebalancing of business models to be more flexible and sustainable. In the end, the companies and industries that survive such storms are those that learn and evolve, using the hard lessons of crisis to build systems that can weather the next “bird flu” – whatever form it takes.

Heritage brands are having a moment but not the nostalgic kind. In the past 6 months, I’ve had more conversations than ever with FMCG and retail CEOs asking the same question: How do we evolve without losing what made us iconic? One CEO I recently spoke with said it best: “In order to grow, we’ll have to expand beyond the category that built us.” This from a French heritage brand that has sold over a billion units of one signature product, now facing flatline growth as consumer behavior shifts under their feet. This challenge isn’t unique. It’s playing out across legacy CPG, fashion, beauty, and retail. → The categories that built these brands? No longer guaranteed to sustain them. → The traditional talent playbooks? Often too rigid to reimagine the future. That’s why I teamed up with brand and growth strategist Linda De Vito to unpack what it actually takes to revitalize without erasing. Here’s what stood out: 1. Core values must be your north star. Heritage brands that scale into new categories without anchoring to brand DNA lose more than market share — they lose trust. 2. Think beyond your own box. Many traditional FMCG marketers are brilliant at operating within their category — but struggle to break out. This is where cross-pollination matters. Bringing in talent from adjacent industries (fashion, entertainment, digital culture) unlocks new creative energy. Sometimes the right person to ask “What if…?” is the one who’s never been in your category. 3. Test, learn, repeat. Linda put it perfectly: “You don’t need to go 100% in from the start.” Whether it’s expanding into adjacent categories or showing up on new platforms (like she did taking Hearst from 2 to 20 TikTok brand accounts), pilot first, then scale. 4. Case in point: New Balance. From “dad shoe” to fashion staple and they did it without abandoning craftsmanship. Or the LEGO Group, which built an entire adult fandom by tapping into nostalgia and creative identity. Their “Adults Welcome” line now anchors their growth story. The real shift? It’s not just category expansion. It’s cultural transformation. From product-led to brand-led. From transactional to relational. Because heritage isn’t just something you protect, it’s something you activate. One stat that jumped out: The global corporate heritage data market is projected to grow from $656.7M to $2.2B by 2030. That’s not just sentiment, that’s strategy. If you’re a CEO of a heritage brand navigating this crossroads, my advice is this: ✅ Know what must never change. ✅ Be brave enough to question everything else. Curious to hear: What’s one heritage brand you think is getting it right in 2025? Drop it below. #HeritageBrand #FMCGLeadership #BrandTransformation #ExecutiveSearch #ConsumerGoods #LindaDeVito #CPGLeadership #CategoryExpansion