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Ron Johnson on how COVID-19 has changed consumer habits

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Ron Johnson, Enjoy CEO and former CEO of JCPenney, joined The Final Round to discuss the state of retail and how consumers have changed their habits due to the pandemic.

Video Transcript

SEANA SMITH: Well, it is a tough environment for retail with many of the big names struggling to survive in the midst of the coronavirus pandemic. So for more on this, we want to bring in Ron Johnson, who's the CEO of Enjoy. He's also the former CEO of JCPenney and the former Head of Retail Operations at Apple. And Ron, it's great to have you back on the show.

We'd love to get your thoughts just about what is happening right now because when you take a look at the retail sector, at this point, Ron, tracked at the highest number of retail bankruptcies in a decade this year. So help us get a better understanding of what's going on in the sector and whether or not you think that we will continue to see more bankruptcies here from the retailers in the future.

RON JOHNSON: Yeah, it's great to talk with you again. When I was on the show in March, it was right when we had our first shutdown and I remember saying, unfortunately, that the question in the retail boardrooms won't be, when do I reopen? It's, will I reopen or how many stores will-- will I reopen? And that's largely true. We've had record bankruptcies.

And that's because the pandemic has reordered life as we know it. It's changed how we work. It's changed how we shop. It's changed how we go to school. It's changed how we travel.

And unfortunately, people develop new habits quickly. And now that we're 20 weeks into the shutdown, like in California, people are more entrenched with things like online shopping, staying at home, delivery, and it's really hurting the physical stores. So if you look at data on traffic to physical stores like malls, it's not coming back at all. The Nordstrom family said today in "Women's Wear Daily" that they're just accepting this is the traffic they're going to get.

So we had hoped for a recovery to old habits of going to malls and shopping, people aren't doing that. They're visiting the stores that stayed open, that were there at the beginning of the pandemic, and those stores are surviving. But those that kind of shutdown or were in closed environments, they're not bouncing back.

- I just wanted to ask you about an operation that you used to run, which were Apple's retail stores, and that they've been opening and shutting, and then reopening and reshutting, and what do you make of that? Does that seem to make sense from your understanding where you sit?

RON JOHNSON: It is. If I'm Apple, Apple is the world's most valuable company, and has a relationship of trust with its employees. They trust everything Apple does. They trust their privacy. They trust their security. They trust the quality of their products.

And so Apple is not going to do any anything that would create a rift in that relationship with the customer. Apple's got a variety of channels they sell products through. They've got a very strong online store. So they're being exceptionally careful, which is, I think, the right thing for Apple.

The Apple store is a place to gather, right? It's a place to learn. It's a place to get help. It's a place to engage, and those are the kind of things you have to be very careful of in a public environment today.

AKIKO FUJITA: Hey, Ron. I want to get back to what you said about the malls because you look at where things are right now in terms of the virus. It's hard to imagine people wanting to pack the malls the way they did pre-pandemic. What kind of closures are we talking about? We've see the retail closures, the individual brands, but in terms of the malls themselves, is there a fundamental shift away from them that we're seeing right now?

RON JOHNSON: Yeah. We all know that. It's a-- the US has a handful of great malls, like Stanford Shopping Center near here. They'll survive, but they'll probably remerchandise the mall. They've moved away from tired, large, older, retail stores to the new exciting formats. And they have a good mix of food, and things you can engage in, and common space, and those places will be great.

But even those are kind of struggling right now because people are not comfortable going out largely in public. But the tired malls, the enclosed shopping malls, largely through the Midwest, the second tier locations, those are the ones that are really going to struggle. And as Penney's closes down and Macy's shut stores, the anchors go, the interior stores start to go, you hit a critical mass where it's pretty hard to survive. So, unfortunately, those malls are going to really have trouble.

SEANA SMITH: You know what? Ron, unfortunately, we're out of time, but you know we'd love to get you back on the program because there's much more we'd like to talk to you about just in terms of retail, where we go from here, and what the future holds for the sector. So we hope to have you back on the program again soon. Thanks so much for taking the time--

RON JOHNSON: And I look forward. I'm sorry to be kind of negative, but it's just the truth right now. It's really hard to be a retail store.

SEANA SMITH: You have to be a realist, and sometimes the truth hurts a little bit. So we appreciate you. We appreciate the honesty. Ron Johnson, thanks so much--

- Truth is good.

RON JOHNSON: Thank you.