Why Big Retail is Failing - Who is Winning, and Why?
Updated: Sep 24
We’ve all seen the news...over the last decade, US Retailers that were once pillars of American commerce - Sears, JCPenney, Toys”R”Us - have been closing doors and filing for bankruptcy at alarming rates. According to CoreSight Research, as of September 2020, US retailers have announced more than 8,000 store closures; more than double the store closures that we saw all year in 2018. Brands like Gap, Michael Kors, Victoria’s Secret, and even Starbucks are closing doors left and right.
Many smaller &/or emerging retailers wonder: if so many that were once “TOO BIG TO FAIL” are closing doors, dissolving brands, and filing for bankruptcy, how could they possibly have a successful retail operation?
The good news: it IS possible.
Despite the hard-left turn into our tech-filled future which has left many in the dust, some retailers are imagining new ways of connecting with their consumers. They are breathing life into their stores, creating experiences that customers crave, making their products easier to access via eCommerce and social channels, and reinventing the shopping experience.
Brands that refuse to evolve and adapt cannot withstand the endless tests of changing technology, trends, and consumer demands. Any retail business has the opportunity to become successful - it’s a matter of always ensuring your brand values, messages, and tools are aligned with those of your consumer’s culture and society.
Let’s look at some areas in which retailers of tomorrow must evolve.
According to the US Census Bureau, in 2010 online shopping accounted for about 4% of all commerce (excluding the food and beverage industry) in the United States. Today, online shopping accounts for over 12% of all commerce in the U.S., and counting. It is also no secret that tech-giant Amazon.com has revolutionized the way that people shop.
Consumers now expect to be able to find any and every product they could possibly want at a moment’s notice from their mobile device or computer - no shoes, no shirt, no problem - and enjoy the almost-instant gratification of receiving their item(s) with free 2-day shipping.
This has been a huge factor in the changing retail landscape that we live in today - shopping malls that once thrived are now barren and landlords cannot find tenants willing to fill the vacancies.
Companies like Target and Old Navy are reimagining the shopping experience by opening smaller footprints, a few thousand square feet compared to their usual +100K sq ft, with tailored assortments that cater to specific demographics or geographic areas. These small-format stores are offering features like ship-to-store, buy-online-pickup-in-store, locate-in-store, and much more to expose their customers to their entire assortment offering, despite the abridged assortment in these small stores.
Retail brands that choose not to dedicate resources to establish a strong omni-channel presence via an eCommerce website, mobile app, and interactive social media presence, are doomed to fail, as convenience, cultural relevance, and experience become ever more important to the consumers of today.
In a recent article posted by Accenture, managing director Rachel Barton writes, “Consumers are no longer making decisions based solely on product selection or price...they support companies whose brand purpose aligns with their beliefs, and they reject those that don’t.”
Social, environmental, and economic responsibility were once abstract ideas to most consumers. They didn’t know where their products came from; they were blissfully unaware of unfair labor practices; they lived in a world where human rights just weren’t as important. Today, customers want to shop with brands that care - about the environment, their community, their employees - and they want to spend their hard-earned dollars with companies that stand for something good.
Ask yourself, what positive impact(s) is your company making in the world?
Do you have equal-pay-for-equal-work standards built into your company culture?
Do you provide guaranteed leave for all new parents?
Have you reduced your brand’s carbon footprint?
Are you giving back to your community?
Do you encourage community service among your employees?
What social causes does your brand support?
These are all things that your customers WANT TO KNOW! Share it! Shout it! Help your customers understand WHY they should shop with you, aside from your assortment of killer products!
With so many different touch points and channels to reach consumers, engagement has become more complex than ever, dramatically shifting how consumers discover, shop and buy products.
The most successful brands in today’s retail industry are interacting with their customers as many times, and through as many channels as they possibly can. In-store; online; Instagram; Facebook; Twitter; like; buy; share.
All of these touch points are crucial to maintaining relevance in the eyes of the consumer. Producing colorful, inviting, shoppable content, and editorial imagery that is consistent across channels will open the flood gates and allow more customers to reach you and your products than you ever thought possible.
If you take a stroll through the sales floor of any of the struggling retail brands, you’ll find their assortments are often stagnant, missing key trends, and have many duplicative styles. Successful retailers of today, and tomorrow for that matter, need to shift their emphasis from “what did/didn’t work for us last year” (A.K.A. “last-year-itis”) to “what will consumers want next year?” This is the only way to keep up with the fast-changing trends and consumer demands - even if your brand strictly offers casual RTW, trend analysis is so important.
There are tons of sites/blogs/reports that focus on translating runway looks of today to RTW trends of tomorrow. Alternatively, you could consider hiring a Merchandising consulting firm to help you navigate the upcoming trends and make the best decisions for your assortment.
Some popular examples of FREE resources include POPSUGAR, Refinery29, Harper’s Bazaar, FashionNetwork, and InStyle, to name a few. If you feel that you’ve already exhausted the free sources out there, consider purchasing a subscription to WGSN, WWD, Stylus, Trendalytics, or Trend Zoom to get customized, detailed reports of current and upcoming trends on runways and in the marketplace.
Store Aesthetics & Visual Merchandising
Think about the last time you stepped into a department store; the fluorescent lighting, boring tile flooring, uninteresting fixtures, and a sea of red SALE signage, all encapsulated by four boring white walls. Pretty dreary image, isn’t it?
Consumers of today choose to go shopping not just to satisfy a product need, but to have a fun experience! They want to shop stores that have a unique, trendy, and inviting atmosphere. This means softer lighting, plush lounge areas, interactive visual displays, murals, photo booths; these are all opportunities for people to share their experiences with friends and family via social media.
Creating a few “Instagram-able” moments throughout your store will leave a lasting impression on your guests and keep them coming back for more. A merchandising consultant with a specialty in Visual Merchandising can be a huge help, especially if you don't have that creative eye.
Another key understanding is that most consumers do not consider themselves to be "fashion experts". As such, we should be taking every opportunity to teach them how to pair and layer items together to build a cohesive look.
We do this through window displays, on-floor mannequins, face-outs on T-stands/ballet bars, and even product placement on the walls. Rather than having all of your blouses in one section and your shorts in another, try placing mix-and-match items on a wall or fixture together to encourage your customer to build an outfit (and purchase more than just one item)!
Last but not least, the age-old problem of aged inventory. Clearance product often muddies your floor and dilutes the seasonal stories you are trying to tell. Alleviate this problem by condensing all of your aged goods to one small section that is organized by type, color, and size.
Schedule promotions on your aged inventory regularly, especially right before a new season of goods hits your floor. This will ensure that your inventory is always in check and you don’t find yourself swimming in a sea of old products!
Though the retail landscape these days can be treacherous for some, success can certainly still be had by retailers young and old with some thoughtful outreach, exciting visual merchandising, and a cause worth shouting about.
Find your brand’s voice - what will you stand for? Create an omni-channel experience - connect with your consumers on social, in their inbox, and in stores. Create an environment that is worth returning to - use your various channels to inspire your customers to touch it, feel it, try it, BUY IT!
From website design and digital marketing to merchandising and inventory planning, FOMO agency™ will help answer all your eCommerce questions.
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About the Author:
Taylor J. Daniel is a 13-year retail veteran, and a Bachelor of Science in Fashion Merchandising, with additional focuses in Consumer Behavior and Business Management. Her career has largely been spent in corporate merchandising departments: analyzing data, managing inventory, devising investment strategies, and making product and marketing decisions.
After successfully managing over $50M worth of goods in a variety of categories for enterprise retailers such as Levi's, Old Navy, and Johnston&Murphy, Taylor now uses her expertise in retail planning to help SMB Retailers create thoughtful and calculated eCommerce and Merchandising strategies that deliver results.
"Retail has changed; what worked for you yesterday won't get the results you want tomorrow! I aim to provide the insights and strategies needed to be successful in today's ever-evolving retail landscape."
Taylor J. Daniel
Vice President | FOMO agency™