Business Insights
RETAIL IS NOT DEAD BUT A NEW MODEL MAY EMERGE
Every time one of the dinosaurs of retail reports some bad news every news outlet runs to say retail is dead.
And someone forgot to send that news over to Zara. I want to say I read on their website that they are opening a store a week somewhere. Every week!
Maybe the day of the department store is dead, but overall retail seems to be thriving (at least where I have been recently.) It may be part of an economic indicator but Somerset Mall in Troy, Michigan was packed to the gills late on a Sunday evening.
I was in Chicago this weekend and Michigan Avenue made it seem like retail was doing just fine. The Water Tower was so crowded it was annoying to navigate. From the Lego store to Tourneau, every store was jammed.
Exit the Water Tower and walk a bit. H&M was packed, Burberry was busy, even the boring ass Tumi store had people in at.
JCPenney’s, K-Mart, Macy’s and Sears, all are dated and will be forced out by other department stores with a better selection, stronger brand image, and better customer service.
HHGregg, Abercrombie, The Limited, and even Crocs will be pushed out by the newcomers or will fade away in the wind as they didn’t adapt, or their fad has run its course.
Even if traditional retail dies, show-rooming will be the new model.
A good example is Pottery Barn and Restoration Hardware. You want to go see it in person before you buy, but you cannot take it home with you today.
Now what if Lulu offered to stock every size for you to try on, but they won’t stock it at the retail locations, they can deliver it to you tomorrow. This cuts down on store inventory and overhead, but you get to see it in person still and make sure it fits.
A Twist
How about Lulu stocks a handful of each piece, and if you want it right now, you pay more for the convenience? People go to retail because they want it right now dammit! Budget minded people can wait a day. Those that cannot wait will ante up. (Amazon is going to do the same thing to us with same day delivery vs 2 day Prime)
If stores where smart they would release the products in-store only for the first 2 weeks at a higher price so people can “be the first” then release it online.
Retail is doing just fine because people love to shop, touch, feel, and see goods in person, and discover new things along the way. Buying stuff in person often feels better than a brown box showing up at your door while you were at work.
We will see a dozen companies die off, and as each dies off we will see a Zara, H&M, Canada Goose, Lulu, Athleta, Madewell, and more pop up.
If we have over built retail space we may see leasing prices drop, lowering the barrier of entry for new retail startups to get brick and mortar space as well.
Companies are always rising and falling.
Nothing new to see here. Keep moving.
