Retail’s Unexpected Renaissance
Stop calling it dead already.
Written by JoAnna Novak
The other day I saw an ad for Macy’s Thanksgiving Day Parade. I’d forgotten the parade was a thing, let alone “America’s Beloved Tradition,” as the commercial said. It turns out that the largest parade in the world has been crowding Manhattan since 1924. Still, the ad struck me as odd.
It only took a moment to realize why. It’s been ages since I thought about Macy’s. Not just the parade: the name, the brand, the store. I felt strange. When I was a kid, winter break meant fawning over holiday displays in Macy’s windows. During grad school, I even spent a summer worked as one of their bridal consultants, rattling off the selling points of bone china.
And I know I’m not the only person who’s slotted the department store in the tearstained file of Stuff That’s Gone (right below Blockbuster) even though they’re still around. I wondered: why is it so easy to forget Macy’s when they began 2017 by announcing 10,000 job cuts and 60 store closings?
Because headlines make it seem like stores are extinct. The rhetoric is eschatological.
Just how accurate is the doomsday talk? Are physical stores becoming dinosaurs? Is online shopping to blame? What is the future of retail at large? And what does all of this spell for today’s sellers, the next generation of makers and brands?
The truth is, debunking the myths means accepting that the landscape of retail can’t be painted in black or white. This is nuanced — and maybe newly fertile — terrain.
What IS Happening with Brick-and-Mortar Retail?
Afew years ago, I started seeing images like the one above — a desolate, grimy shopping mall — everywhere. They came in slideshows people shared in the news feed; they populated channels on YouTube and featured in TEDTalks. And they were described with a weird mix of reverence and glee that always made me click.
“Depressing.” “Sad.” “Creepy.”
I felt all of those things after looking at the so-called dead malls, but that didn’t change my shopping habits. I bought some things from stores, ordered other stuff online. Was I contributing to the downfall of physical retail?
Not really, says Alison Embrey Medina. Medina is the editor-in-chief and associate publisher of design:retail, a trade publication about everything from lighting to window displays in stores, as well as the broader trends shaping retail — in all its iterations.
“E-commerce and m-commerce,” Medina says. “And every other way people can buy.”
Medina is tired of the fearmongering. “Most of the headlines … say how great online sales are doing, which is true,” she told me. “Every year online sales are going up, but so is the entire pie of retail. We’re spending more money overall.” And CNBC reports 85% of purchases still take place in stores, with some analysts putting that figure as high as 93%, when auto sales are factored in.
Still, if consumers are shopping, then what accounts for the closing of so many brick-and-mortars? According to a recent article in Bloomberg, “Long-standing chains are overloaded with debt — often from leveraged buyouts led by private equity firms … sustaining that load is only going to become harder.”
Why? Strategic advisor Steve Dennis, in Forbes, described it as a problem of middling: middling products, middling customer service, middling shopping experiences. “While it’s easy to credit the ‘Amazon effect,’ or the overall rise of e-commerce, that’s only part of the story,” Dennis writes. “The fact is many factors conspired to squeeze the middle, while, for the most part, the two ends of the spectrum continue to thrive.”
So, What About Online Shopping?
Iremember the first Thanksgiving I spent with my in-laws. I woke up and, before even joining the family for coffee, I went on my phone and bought an Alexander Wang leather backpack with a pre-Black Friday discount code. No way was I going to find that backpack at a shop in northern Minnesota — and even if I could, what were the odds of getting such a good price?
At the time, purchasing anything on a smartphone was a pain. Today, it’s the norm — or becoming that way, if Black Friday-Cyber Monday (BFCM) is the gauge it usually is. This year’s BFCM figures told an unsurprising story:
E-commerce crushed it.
Adobe data called 2017 the most lucrative Cyber Monday in history, with online retailers netting $6.59 billion. “Large retailers (over $100 million in annual revenue) saw higher AOVs and desktop conversion rates. Small retailers (under $10 million in annual revenue) saw 30 percent higher conversion rates on smartphones than large retailers.”
It’s that last bit that should make SMBs and today’s entrepreneurs perk up. While m-commerce may have been a frustrating experience in the past, these figures point to a sea change. And it turns out, smaller retailers may be uniquely positioned to create mobile shopping channels that appeal to their unique users needs and wants.
“These big mass chains are the giant cruise ships in the ocean,” Medina says. “The SMBs are little jet skis, zipping and whipping all around… They have the ability to be innovative and exploratory and try new things.”
It’s this agility that champions of e- or m-commerce laud. Compared to the one-size-fits-all experience of going to, say, a mall, online shopping is personalized and intimate (yes, sometimes creepily so).
As AI becomes a staple of the consumer experience, expect the e-commerce world to feel even more customer-centric. Co-founder of Triangle Capital Richard Kestenbaum sees this as a boon to both sellers and shoppers.
“Using artificial intelligence … works for consumers and it works for Revolve Clothing,” Kestenbaum writes in Forbes, adding, “their business grows consistently at 30% per year. Using data, they are creating not just their own products but their own brands … reducing the importance of well-known brands on their site, improving Revolve Clothing’s margins and increasing their market power. It does not involve guesswork.”
Despite these advancements and even if consumer spending is on the rise, for today’s SMBs and e-commerce brands, perpetually hearing about the end of retail is a little bit like your parents announcing their divorce on your wedding day. The analog backlash may be the David against digital technology’s Goliath — but wait. Is this even a battle? Is there sense to this war?
Probably not — or, at least, not the battle we’ve been told it is.
Scorched Earth Leads to Rejuvenation — or Seamless Innovation
Amazon is opening bookstores and piloting line-less grocery stores.
Fashion-with-a-conscious e-commerce brand Everlane had lines out the door for its first brick-and-mortar.
Home improvement giant Lowe’s houses pop-ups with b8ta.
Walmart may have removed “Stores” from their company name, but even the biggest of the big box retailers isn’t sitting still.
The truth is, the present moment is an opportunity, a potential renaissance for retailers of all stripes. “The innovation that’s happening right now hasn’t been matched anytime in our lifetime,” Medina believes. “It’s a time of rapid adaptation … to keep up with the consumer today, who basically has a functioning cash register in their pocket at all times with their smartphone.”
What this means is that successful retailers of the future will likely comprise both physical and e-comm storefronts. “The biggest misconception [about retail],” Alison Medina told me, “ is that it is physical versus online.”
It’s not physical versus online.
It’s about the customer. It’s about understanding the customer and figuring out what experience works best for them. It’s about understanding that retail isn’t just the product for sale, but about how that product is sold. There’s a story around every sale (running a successful ad campaign means knowing this, of course). But the solution isn’t always retail and it’s not always e-comm. Like Ben Lee in Forbes notes, “Digital-first delivery and inclusive marketing won’t work if they’re not what your customer is looking for.”
Acknowledging that story means acknowledging humanity. This is why smart marketers are turning to Facebook Messenger. Why Apple envisions a future with Town Squares. Or why Medina notes the success yoga-clothier Lululemon has in forming partnerships with the major yoga studios in markets where they open stores.
Whether that community is built digitally or physically, the retailer of today stands to meet a customer who’s willing to do more research, buy through more streams, and identify more wholly with the ethos of a brand.
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