Brick and Mortar woes
I might have been a bit too early to this party but I have been expecting the demise of the large brick and mortar retailers for years and have written it about it countless times.
Macy’s closed another 100 stores this week. The Limited closed all 240 stores and will only keep an online presence. There will certainly be more as history has shown when one giant falls the rest seem to follow suit.
All fingers are pointing to the growth of ecommerce from the titans such as Amazon but I don’t necessarily agree. There is no doubt that more people are making their purchases online but if you look at the data we have barely scratched the surface. What we are seeing might be a combination of things.
We are seeing new companies come on to the scene and take over some of that brick and mortar which means grabbing some marketshare. They have seen the next generation and have created environments and brands for them to buy. More than anything the old guard has done nothing to innovate. They have continued to operate like 1980 where in order to hang your brand in their store it will cost the company to do that. When Ralph Lauren has garments hanging in Macys and they do not sell, it is up to Ralph Lauren to make up for that loss. Brands got hip to that and created their own destinations on line or in their own brick and mortar but mostly on line to sell their products. The majority of the websites for large department stores are terrible. They have not created environments that make consumers want to come in and enjoy the show. There are plenty of stores across the globe who have been innovative in brick and mortar facilities that make the consumer want to continue to come in and make a purchase.
If you look at enterprise companies such as Verizon or Facebook we will see more M&A’s over the next decade as those companies realize that they need to bring in agile companies who can help their organizations become forward thinking, keep their marketshare and innovate. The department stores have not figured that out. Nordstrum’s is the one store attempting to do that by making investments and purchases such as Trunk Club but once they are under their umbrella it appears as if they do not know what do to with them in order to create excitement, customer loyalty and how to use their platform to rethink old school ways.
There are plenty of companies who have continued to rethink themselves as all brands have to in order to survive year after year but the department stores look like they just killed themselves.