31 Aug The Decline and Fall of Retail As We Know It
Omnichannel Retail Story:
FEATURES, THE NEW RULES OF RETAIL, TRENDS
The Decline & Fall of Retail As We Know It
I was reminded of that recently when it became obvious she’s gone missing again. This time, no amount of cookies is going to tempt her down the aisle, into the store, or into the mall. The female shopper is MIA. And on a much bigger scale than ever before. Where is she? She’s happily ensconced at her computer, ordering at will, searching for companies that offer free returns, or at least free exchanges. Good news for the United States Postal Service. Bad news for conventional retail.
How do I know she’s gone? Well, Cushman & Wakefield told me in their annual survey of mall traffic during November and December. In 2010, it was 35 billion visits. In 2013, it was 17 billion visits. That’s a 50 percent decline in the space of three years. It hasn’t hit bottom yet. She’s still leaving the malls and she’s not coming back.
Shifting Sands
Prediction: In about 20 minutes it is going to seem so very quaint that Saturday mornings in suburbia were spent making a list, dividing the chores, heading to the grocery store, the home improvement center, the mall.
Prediction: A little bit after that, let’s say a half an hour or so, we’ll recall fondly that there were once things called malls and we shopped in them. Imagine. Our voices will sound a bit like the epilogue to Camelot: Never let it be forgotten that once there was a spot…
Prediction: In urban areas, the huge high-rise buildings will be multi-use, apartments and work sites. We won’t have to leave the building to go to work, the taps will run a series of sponsored soft drinks, right through the pipes, and so will the detergents, fabric softeners, and dishwasher suds. “Mine is a Pepsi building.” “Cool! Mine is a Coke.” “Well, we have Tide, Downy, and Cascade.” “Ours too.” Note to packaged goods people: It will no longer be enough to be the number one, two or three brand in your category. The delivery system will offer radical convenience, but only one brand, the one that is savviest about negotiating early on with developers and builders. Just saying. Note to automotive types: Individually owned cars are going to be a luxury purchase only. Real people will simply not need a whole car, they’ll opt for shares, like Zipcar, or, easier still, Uber. Reports show that typically, American cars sit at home 23 out of 24 hours a day. So the sharing economy may kick in on this front to share cars that are sitting idle.
In short: these predictions will come true very soon. Everything changes. Not on little cat feet, but with a mountain lion roar echoing through our urban canyons shaking up our habits and our set points. Think about the groceries, for starters. We take the list to the grocery store, survive the parking lot, grab a cart, load individual items, unload them onto the conveyor belt, pay, load them into bags, load them into the car, take them home unload them from the car and then pack them into cupboards and refrigerators. Then, we magnetize a new, blank list to the refrigerator and prepare to begin anew, planning next week’s rinse and repeat.
Our children will tell their children about such an Odyssey in the far-off tones our parents used to tell us about outhouses. Back in grandma’s day, we went to a place called the grocery store every week and had to keep track of everything we needed for the week ahead! Now think about the rest of the chore list: the Home Depot, the fashion mall. The notion of these shopping stations, currently spaced like 20-mile road markers throughout the American landscape, is going to be every bit as peculiar to our progeny. Why? For a perfect storm of reasons. First, because of Amazon and its acolytes. Second, because the Internet of Things is coming (quickly—think self-refilling refrigerators). Third, because our retailers have sucked the fun out of shopping.
The Future Belongs to Those Who Sell Fun
We know about Amazon. Profound convenience. Fair prices. Endless selection of every possible thing she could want. New online retailers pop up routinely. Some work, some not so much. But it is interesting that none of the major well-known retailers have figured this out enough to take the lead. We think Zappos for shoes, not Nordstrom. We think Birchbox for cosmetics, not Sephora. We think One King’s Lane for home decor, not Bloomingdale’s. These online brands are offering fun, adventurous, and even educational experiences. The algorithm does the messy bits of dealing with us as individuals, our preferences, our purchase intent, our level of sophistication and knowledge. It’s all fun all the time.
The ordinary, don’t-want-to-run-out-of stuff is going to be automatically replenished. The refrigerator knows what it needs, ditto the cupboards and the pantry and the soap dispensers. No worries. Be happy. We’ll be walking around the neighborhood and stumble on a cheese shop that is curated with discovery in mind. Ditto the butcher and fishmonger. Ditto the florist. Ditto the fruit guy with the pushcart on the corner. These retailers offer a reason to leave the work/life continuum and wander a bit, find the fun bits, the price-impervious experience of it all.
Fun in the Rearview Mirror
But what about big retail? Hey big guys, you can’t duck the future. And, it’s a starkly different one. It’s one you are so horribly unprepared for. It’s like watching the ice age hit the mastodons. Notice how the word “fun” is used to describe various shopping experiences. Do you think anyone enters your door imagining fun? Let me help you here: They don’t.When other industries have noticed the female shopper abandoning them, they’ve had to adapt or die, right? When conventional wisdom said that the advent of television, or cable, or Netflix would do away with movie theatres, the film studios and theaters kicked into high gear. Great must-see chick flicks, rom-coms, and comfy seating. Movie theaters made better utilization of their basic footprint. One big, clunky theatre with its soiled, saggy seating, stale popcorn and a vague smell of urine wafting throughout becomes a bright, shiny hydra-headed nucleus with eight screens, reserved recliners, gourmet treats, and pristine restrooms. When Big Automotive finally realized she was the car purchase decision-maker, and oftentimes the sole buyer, they cleaned up the waiting rooms, launched the “no dicker sticker” pricing, and trained the sales staff to stop looking through her for the guy they thought must be behind her. When Big Food thought coffee was a declining category, Starbucks was able to trust her, believing she’d be willing to pay for interesting brews interestingly presented in a safe, friendly and, yes, interesting, great smelling environment. So why not Big Retail? Why is the only answer price promotion?
The market has bifurcated. There are the wealthy, up to their ears in luxury brands. And there is the declining middle class, with little disposable, discretionary spending. What money is available to spend on clothes and yard ornaments goes to Walmart or factory outlet centers. Did you notice the only major retailer to post growth this quarter is Walmart? Growth of one percent, which isn’t breathtaking, but it is growth. And, on a huge base, so sooner or later: real money.
Try Harder
Plenty has been written about newspapers failing because not enough of their readers still read the ads. But imagine for a moment that it is not the fault of the readership. The issue is the ads provide nothing worth reading, just dollars off on Cuisinarts, luggage, mattresses, sofas, and polo shirts. Do we honestly believe this is interesting? One-day-only sales last for weeks at a stretch. Major retailers seem to believe she’s only interested in saving money. So they force their vendors to bring product in on the cheap. She notices that the quality is off—so why bother walking through the mall to get to the poorly merchandised goods when it looks so gorgeous online? She’s not getting value, despite all the signs screeching “SALE!” In any event, it’s not fun to walk into a store, rifle through piles of discounted foolishness and then beg for a dressing room, only to be treated like a wanna-be shoplifter, and then wait for a cashier willing to ring her up. In the ongoing death spiral that is middle market retail, we are watching a game of musical chairs. Every time the music stops, another retail brand bites the dust. Farewell, Scoop. We miss you already, Aéropostale. And, hey! The rest of you as you begin to abandon your real estate, try to rehire and retrain your store staff to be the voice on the phone, shipping packer, or inventory manager. Please don’t just send those jobs to a bank of telemarketers. Take advantage of the experience and knowledge of your store personnel as you repurpose the real estate savings and put some human value back into the shopping calculus.
Survivalists
Can anything be done? Nothing. Looking forward, we aren’t going to be shopping in malls, at least not the ones that cater to the middle-class shopper. Luxury retail will continue to thrive, but where? In their perfectly curated venues. Middle-brow brands that want to maintain a business will have to adopt luxe approaches,in terms of service and staff training, at least for a few showcase venues. Otherwise, we’re shopping online folks. We are on the cusp of a revolution every bit as powerful as the tectonic business-plate shifts we all studied in the Industrial Revolution during sophomore European History. Most major retailers are going to become the equivalent of 19th century landed gentry, charging tourists admission to Downton Abbey-like retail store curiosities.
Story Courtesy, The Robin Report
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