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| Photo Laurel Marcus Click images for full size views |
If you’ve recently shopped the mall or a once-thriving department store, congratulations — you’ve just supported an endangered species. Are department stores, and hence, shopping malls the new retail dinosaurs? That was the somewhat scary topic of the annual “state of retail” FGI breakfast and panel discussion entitled “Department Stores: Going Going Gone?” that I attended on Tuesday at the New York Hilton featuring Robin Lewis of The Robin Report and sponsored by Hearst.
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| Photo courtesy of FGI |
The panel consisted of L to R Moderator, Paul Charron; Danny Ryder, Nordstrom; Mike Blandina, Westfield; John Tighe, JC Penney; Nancy Cardone Berger, Marie Claire; Robin Lewis, The Robin Report.
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| Robin Lewis Photo: Laurel Marcus |
Robin Lewis gave an introduction to “the elephant in the room” aka the $52 billion apparel retailer Amazon, a company which catapulted from a 7% share of the apparel market in 2015 to a projected 19% share in 2020. Retail stores are in a “race to the bottom” including “insane price promotion and discounting” as the offshoot. He put up several charts (see article “Is A Department Store Future An Oxymoron: The Tsunami Is Now”) predicting doom and gloom for brick-and-mortar. The wave of the future (the Tsunami) involves Millennials or Gen Y’ers who hang out on their phones rather than at a mall, “rent, swap stuff, and have no brand loyalty. They are used to finding anything they want instantaneously for the lowest price.” Lewis called on the panel to surge ahead anyway: “Let’s not waste this disruptive period. It’s time to take advantage of this time — which these guys are,” he said. By the way, two of the panelists remarked humorously that they hadn’t known the name of the talk in advance, deciding to remain optimistic. If department stores want to survive they’ll “have to do new things in different ways, ” Charron urged.
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| Audience Photo: Courtesy FGI |
So what are the new things that they are doing in different ways? Tighe of J.C. Penney cited the addition of a Sephora and a hair salon. “It’s really hard to get your haircut online,” he quipped. Interestingly, he remarked that “Seventy-nine percent of our orders touch a store in some way, whether it’s through returns, buying online and picking up in store or coming in to try something on which was first seen online. “We have a vibrant e-commerce business in which stores become very vital. We need them.” Ryder of Nordstrom added that they are striving to make the store more experiential and to incorporate “discovery in store” sometimes with familiar brands such as Nike or Levi’s. Blandina of Westfield, spoke of trying to inject some of the “mystery and surprise of what I find at Costco. I gotta have the set of 62 screwdrivers but I don’t know why,” he remarked. Charron pointed out that the excitement should start from the outside: “The windows should tell me a story to get me to visit a store. Socks on sale is not a story.”
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| John Tighe and Danny Ryde Photo: Courtesy FGI |
The draw (if there is one) of the private label was discussed, as well as the exclusivity of a brand collaboration with a known designer such as Tommy Hilfiger. “Items or brands that can’t be bought anywhere else must be of exceptional quality and at a good price” in order to add value, Tighe said. He also remarked that J.C. Penney is doing more apparel in the “casual spaces” since almost no one wears a tie anymore “unless they’re going to a funeral.” Penney is also “evolving into a different store” by focusing more on a “home refresh” including appliances, flooring, window coverings, as well as the beauty offerings and concentrating on closing some of their less desirable stores in favor of those with upscale locations.
When asked what a “winning experience” looks like, Ryder mentioned that Nordstrom will focus on more product demonstrations which include “different interactions with salespeople as well as self-service.” He described a reservation service online which will notify the salesperson when you are nearby and when you actually walk into the store. Taking it up a notch Blandina mentioned that instead of an individual store app, consumers could be reached on Snapchat and Facebook. “Engagement starts there,” he says, employing such buzzwords as “natural language” and “personalization.” (Thankfully the once omnipresent “omnichannel” seems to have fallen out of favor). How does it work?
After you inform the store what you are looking for a sales associate would gather options for you and have them available as you walk in. “We are tracking shoppers at a high level in our malls. If you’re a loyal Nordstrom shopper within 20 feet of our door we could offer you a 10% off coupon, however after you pass the store, it’s just creepy,” he said. (Wait — explain to me how it’s not creepy even beforehand to “spy” on your customers?) And it’s not just one store: “We are sharing data across physical networks between retailers.” Back in the day it used to be “Does Gimbels tell Macy’s?” Today they do (or would, that is, if Gimbels still existed). Ryder spoke of online vs. in store front-end merchandising and how to “use online as an asset, not a threat to our sales assistants. When we get customers involved in our whole retail eco-system, they will spend more, which benefits everyone in planning, buying and operating.”
Moderator Charron mentioned the concept of “CEO’s who think they can lead through an upheaval of change” when it’s often better to get an “outsider” who may not be from the world of retail (such as those at Apple or P & G), in order to “steal good ideas from other people.” Blandina left Paypal to go to Westfield to oversee the “mall owner/anchor/tenant relationship” and to “help retailers reinvent retail. This whole world is going to change in the next five years.” Westfield Retail Solutions was created to build a network of retail operators — “we’re partnering in a completely different way than we’re used to” and ideally would like to have one website to connect across retailers in the way that Amazon does. Similarly, Ryder is looking at the future but if you can’t beat ’em, join ’em: “The platform that’s taking over is Amazon. There are some partnerships we’re looking at with them.”
Charron points out that the big box retailers and mall development partners must have a close collaboration going forward “otherwise you will end up as roadkill.” How will malls repurpose themselves for the future? Blandina is excited about entertainment at a mall near you including drone races, musicians playing, and extended night hours of operation. It is also suggested that malls should be made to encompass a place to do all your Saturday errands including supermarkets, tailors, etc. Tighe mentions that there will be a natural evolution as there was from the J.C. Penney of yore that used to sell guns and ammunition.
After the Q & A where topics such as “showrooming” were briefly discussed, those in the audience were encouraged to write down their question (shouldn’t they have been texted, then magically appear on the large screen here in tech world?) lol. Charron gave a shout-out to his friend Mickey Drexler who just left J. Crew. “He started at A&S, the principal training ground at the time; went to Bloomingdale’s, Ann Taylor, Gap, Old Navy and then J. Crew,” he recounted by way of saying that Drexler is just taking a break, not going into retirement.
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| Victoria’s Secret retrospective exhibition Photo: Laurel Marcus |
Although the day was chilly, damp and gloomy I felt inspired to check out the local retail climate in light of my newfound knowledge. Arriving on Fifth Avenue, I passed the huge Victoria’s Secret flagship when a display caught my eye.
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| Photo: Laurel Marcus |
Several of the costumes from past VS fashion shows were in the window and more were teased in a retrospective exhibit on the 3rd floor. I confess that got me in the store (it’s pretty cool and I recommend checking it out if you’re in the area) however I left empty handed.
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| Wellery |
Continuing on to a mostly quiet Saks (it was still pretty early though) I marveled at how I barely recognized the place due to an extensive makeover.
The second floor is the temporary home (until fall) of Wellery which includes a spa of sorts as well as all manner of workout clothing. On the third floor I tried on a pair of 40% off Roberto Cavalli jeans however the extremely helpful salesperson couldn’t locate my size, despite checking other stores.
I did buy a pair of 40% off shoes on the 8th floor, putting an old reward card to use. Still thinking about the Cavalli jeans I came home, searched online, found them on Farfetch (from Italy!) at an even greater discount including the nominal shipping charge which includes overnight delivery. Department stores take note!
– Laurel Marcus
