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.


Comments (Archived):

  1. William Mougayar

    yup, sad reality. Re: “old guard has done nothing to innovate”. That doesn’t just apply to their websites. It also pertains to in-store technology.If you saw sales associates at Saks in NYC for e.g. with a tablet in their hands helping and guiding customers via a combination of online and in-store intelligence at their finger tips, they were probably using my friend’s tech at… (Canadian company).

    1. awaldstein

      So retro honestly. Putting online terminals in everything from tire stores to clothing was the beginnings of it all trying to capitalize on the cost of combining POS with online.

      1. William Mougayar

        These are iPads that make the store sales assistant better able to help the client, because they have the data at their fingertips. Eg, you want something they don’t have, but the assistant can order it for you online while you’re there, and many other scenarios.

        1. Gotham Gal

          More than that is needed

          1. Twain Twain

            MS Kinect & smart mirror for retail stores:*…And Twitter invested in a in-store beacon company in 2015:*…There are huge inventory distortion problems with retail ($1.9 trillion). Unlike Amazon, they have no idea who’s buying things in their stores. Unless a customer fills out a loyalty card application, they don’t know.One option to solve that piece of the puzzle would be in smart tags on the clothes that can detect the customer’s phone and identify who they are and when they pick up the item of clothing to try on.The various bits of the hardware needed exist but no one’s integrated it (yet).Most people think in terms of push notifications via beacons, sales assistants with tablets and/or eye-tracking of what items people look at as they wander the floor.

        2. awaldstein

          this is a bandaid on a gushing wound my friend.ecommerce is getting incredible. underwear. jeans. jewelry.there has to be a real reason to go to the store.start with that brand by brand.this other stuff is simply tech thumbs in the holes in the dike. not a right approach in my opinion.retail needs to think a lot bigger.

          1. Anne Libby

            As ecommerce has improved over the internet, stores have shot themselves in the foot by not getting *better* at the human interface. And I mean simply getting the attention of/help from people working in the stores. Until quite recently I would have scored apple at an A+ on this, and it’s certainly a reason that their stores are crowded — they’re a destination where you can get people help, either buying or using the technology.(I’m rarely in a department store, but had a notable experience at the State Street Macy’s in Chicago last summer — coindentally after having had coffee with @pointsandfigures — and it was a ghost town. Very few shoppers, and though I navigated through several floors via escalator, not a single employee approached me to see if I needed help.I wonder how salary and training expenditures compare between Apple and Macys?And Saks, meh. I’ve dropped a few bucks there over a lifetime, and worked with stylists/personal shoppers there when my career required more of a “wardrobe” than it does today. You’d think that they’d be reaching out to me periodically to cultivate more purchases. Nada.)

          2. Gotham Gal

            great question but the reality is people use and want the newest computer and iphone. they also need the genius bar.

          3. Anne Libby

            Exactly, and partly because of the solid, helpful people who work there. We do want what they sell, but I used to want what they sell at Saks, from Saks, too.(One thing they still seem to do well: fitting bras. They have my email, why not see that I’ve become a “single issue shopper,” (lol) and try to engage with me around what else I might need?)I don’t know Costco so well, but there’s always an article out there circulating about how they invest in people:

          4. Gotham Gal

            And keep in mind that the millennials don’t want as much when it comes to clothing. How do those stores scale down and rethink themselves

          5. Anne Libby

            Yes, and casual dress is a norm in many more workplaces, at least in my circles.

          6. awaldstein

            Apple stores are crowded cause the Genius bar. I buy most of my Apple products online from them but do use the Genius Bars quite a bit.That’s why I choose Apple back then.How bout this–through the holiday season and a major bday with lots of gifts I shopped in the following places.-awaycool suitcase brand that had a popup in soho then bought online and they ubered it to me.-kate spadeshopped sales in the shop as i needed a salesperson’s help-ughsame thing-papayrusbest hand cut card and wrapping paper solution. needed to touch themwine of course.most everything was online and didn’t pay shipping for anything that i remember.

          7. Gotham Gal

            that sums up the shopping experiences..

          8. Anne Libby

            Same. I switched from IBM to Mac, emotionally, the day I went to the genius bar with my dad and saw how smart, caring and helpful they were with him. When my last pre-lenovo laptop went, I went Mac.Apple took the reason that most people reach out to them — something doesn’t work — and decided not to treat it as a problem. They put tech support in their stores, and staffed it with good people.This year, I skipped most shopping did a lot of “experience” and handmade gifts. Except last minute stocking stuffers, shopped multiple times at a suburban Target. My sister found something on the shelf there that had arrived broken from Amazon. When I couldn’t find something, people walked me over to another person who then helped me to find it. (Even a lady whose job was schlepping carts did this for me.) It was so notable that I actually found one of the store managers to compliment him.

          9. LE

            Apple stores are crowded cause the Genius bar. I buy most of my Apple products online from them but do use the Genius Bars quite a bit.Your comment reminds me of how important social proof is in marketing and selling. In other words the business of the store is improved by the crowd and hence the products seem more popular and that helps them sell. This reminds me of restaurants that we used to trade with (back in the 80’s) the idea was to loose money on meals but appear to be popular for the full priced diners. Many examples of this obviously out there in all sorts of businesses (on opentable the ’14 people booked this restaurant today’ is an example as well). Also reminds me of when I helped my ex wife a long time ago hand out her coupon books on college campuses. Once you got a line going of students asking for books other students joined the line. If the line went empty though very few people would start the line on their own ‘what is this thing?’ so you literally had to drag them in and get the line started again.

  2. CCjudy

    Im in San Francisco and went to Macys friday 1/6. Its too crowded with stuff. This is not the right way to use space to bring in young people who buy. They could use Apple store as a model… J

  3. awaldstein

    I am hopeful (not pragmatically so) that alternatives to chain groceries for perishables will challenge the current distribution stranglehold which is stifling innovation.

  4. LE

    They have not created environments that make consumers want to come in and enjoy the show.Exactly! It’s about the show. Shopping is part need and a big part entertainment. Was at a well located mall in LA area right before Christmas and it was not busy at all. And this is a mall that is upscale enough to have an Apple store in it where people bring their pets. The only store that was busy was the Apple store. Other stores I walked into I was the only customers.Think about dining and restaurants. It’s part ‘need’ and part entertainment. Imagine if restaurants (as a group by way of seeing what their peers did) hadn’t figured this out years ago to make the entire experience enjoyable, more than just eating food. The decor, the service, and the food. You go out to eat and you entertain yourself. Compare that with when we were growing up and went out 2 times per year and ate at home. No such think as a Buddakan experience.Or look at Whole Foods as a place to buy food vs. a typical 70’s or 80’s supermarket. You like to shop there and you enjoy the experience. It’s more than just the food quality.

  5. pointsnfigures

    The Macy’s store on State Street in Chicago used to be Marshall Field’s. When they got rid of the “Marshall Field” brand, locals were pretty upset. They might think about bringing the brand back. The store itself is pretty amazing inside. There are some beautiful architectural features, like a Tiffany glass dome and the Walnut Room. Agree, it’s cluttered-unfocused and the merchandise isn’t so great. It used to be a destination store when it opened-“Give the Lady What She Wants”. But, now they are cramming a nationwide concept into a store that could use local.

    1. Anne Libby

      Lifelong shoppers (like my mom and her cronies) won’t go into Macy’s! (Lol the fact that I visited that store the day you and I had coffee got me a big side eye.)That said, my 3-4 trips to the Loop in 2016, wow. It looks worse than it did in the 80s, and a bit like parts of Manhattan did back then. Fewer shoppers and pedestrians — maybe partly because so many of those destination stores are gone, the larger financial firms that used to have 10s of thousands of employees have downsized — more homeless people. I was shocked.

      1. pointsnfigures

        Interesting perspective. I live in the Loop now. Raised my kids in the Gold Coast. There are A LOT of homeless. It’s getting gross, and stifling. Crime is way way up.

        1. Anne Libby

          Yeah, I’ve seen some of your tweets and posts on this, so what I saw wasn’t a total surprise. I lived in Hyde Park for a big chunk of the early 80s, college, and worked in the loop. Of course the Loop didn’t have many people living there (legally, that is, had friends who lived in a warehouse!) I don’t remember being there late at night with any frequency. Very sad to see.(And homelessness in NYC has gotten much worse of late, too.)

          1. pointsnfigures

            At the same time, more people are living here full time, Millennium Park is great. Maggie Daley park is great. The theatre scene is awesome. Rahm needs to clean up the homeless though. With the West Loop developing, there are more people around. Agree, the traders are all gone. All the finance firms are gone. That’s really what gave it vibrancy. 6000 of us, plus all the support staff, CTAs, IBs, execs etc. A lot of divorce attorneys, barbers, and bartenders went out of business when we were gone.

  6. Iva Teixeira

    Thank you for this post Joanne. You are spot on. Beyond all of the above, the big mall players have not figured out what to do with themselves either. Retail space is beginning to clear out as department stores are finding it hard to combat the “power of the click”, retail leases are drying up as a stream of revenue. As a result, the mall companies who used to invest mostly in real estate investment and management as a core skill set, are now having to reinvent themselves as companies who know how to provide the weekend shopper with experiences, supplemented by some retail. That’s a tough shift which requires a completely different operating model supported by a change in talent, processes, metrics, incentives… the works. Slapping on an Eataly outlet will soon just not cut it.On the bright side, those of us into technology see plenty of opportunities to both recreate the brick-and-mortar experience AND supplement the e-commerce trend with a number of useful solutions. My prediction is similar to yours, retailers who get good at M&A will live to tell the story of this shift.

    1. Gotham Gal

      it is hard to shift into a different operating model after being in the same one for decades….for sure.