Brick and mortar retail, especially for big-box stores, has been extremely challenging. With Macy’s closing down locations, BCBG filing for bankruptcy, Sears announcing its store closures, American Apparel going out of business, and many other similar incidents, it’s difficult to ignore the harsh retail climate. However, like with every fail, it’s important to see the lesson you can take away from the experience. That way, you can use the knowledge to be more proactive about your business strategies and direction. Here are 5 lessons you can learn from big retail fails.
Retailers invested a lot of money in opening up way to many retail spaces when interest rates on loans were low. The good times don’t last forever. Pace yourself when you invest in new stores. Really do the research on future operational costs, the demographic of the neighborhood, and realistic financial sales projections to keep the store sustainably afloat.
Remember when Macy’s bought out so many of their competitors like Robinson’s May, Marshall Fields, Lord & Taylor, and over 20 other retail establishments? When you think about, it actually worked out quite well for the companies they acquired. This brings me to my next point of expanding with caution. There’s nothing wrong with acquiring companies, but do it in a more strategic way that targets customer behavior, not just a specific area of business. Look at Amazon. They don’t just stick to clothes or books. They acquired companies like Whole Foods, Zappos, and Audible, businesses that their customers most likely will also buy from. Macy’s on the other hand, focused to just buy fashion brick and mortar retailers so when the retail climate went dim, so did all of their sales. There was no company in their books that could provide even a small band aid.
Big corporate businesses are known for enacting change too slowly. That’s because of the red tape that exists in their structure due to checks and balances amongst management. Getting on the digital marketing and e-commerce train was no exception either. Big retailers aren’t necessarily the most tech savvy bunch. So many of them still use clunky cash registers for crying out loud. So when it came to taking advantage of digital marketing and online shopping, they were also late on that train, meaning loss opportunities for capturing customers through online marketing.
Customers are people. So naturally, they get older, their lifestyle changes, their tastes mature, and their spending habits also change. Some retailers just didn’t know how to evolve with their customers and the best example we can give you is Bebe. They were stuck on this club girl who was willing to pay over $100 for a dress to wear at a nightclub. But those women mature and suddenly, the sexy clothes at a premium price just didn’t match their lifestyle. The new group of young club goers then had other much lesser expensive options from online brands.
Many people nowadays are investing less money in acquiring material things and more on experiences, specifically dining and traveling. “Hotel occupancy is booming. Domestic airlines have flown more passengers each year since 2010, and last year U.S. airlines set a record, with 823 million passengers. The rise of restaurants is even more dramatic. Since 2005, sales at “food services and drinking places” have grown twice as fast as all other retail spending. In 2016, for the first time ever, Americans spent more money in restaurants and bars than at grocery stores.” – The Atlantic. So a very obvious lesson, opening a store, nearby dining areas that your target customers go to is a superb idea. Your store can be the place where patrons kill time and shop until it’s time for their reservation. Our client’s store on Abbot Kinney (Enze) did this so strategically well. They get customers waiting to be seated at the popular restaurants, Gjelina, on top of benefitting from the heavy street traffic of wealthy tourists visiting Venice. And the fact that they have a travel theme to their store works in their favor too!
Despite all the challenges and struggles, brick and mortar retail is not going away. So it’s best to figure out how to make it work for your business and your customers. For more information on how to improve your current brick and mortar business structure or guidance on opening a modern brick and mortar establishment, just send us an email at firstname.lastname@example.org. We’d love to see how we can support your efforts!