Brands Take Over
The power had begun to shift from department stores to the brand. The path began sometime in the ’90s when brands got tired of the cost to be in a department store.
In 1987, I was a buyer at Macy’s. I started out buying large-sized women’s denim. At that time, Macy’s was playing heavily in the private label business. It took buying dollars away from me, and so it became frustrating and boring. They gave added swimwear to my buying budget, but it was unchallenging. Not to mention the misogynistic behavior.
Moving private labels into the mix in all ready-to-wear helped boost the margins. The problem is they bought so deep that it looked like a Gap. The leaders were lost. There was an attempted buy-out and eventually bankruptcy.
Before all of that, Macy’s told the brands what the assortment would be, and if they didn’t achieve the margins expected, then well, the brand would pay for that too. It cost real money. The brands began to shift how they worked, with the stores taking more ownership and decision-making around their brands.
Retail began to evolve as brands were able to sell directly to consumers. And now, the onslaught of Covid has forced this industry to take a hard look at where they are going and what needs to change. Many department stores are just going back to the well, taking out more debt and restructuring without anything much different. The only interesting thing I have read is that Nordstrum has added Tonal, an at-home fitness company, in 40 stores promoting fitness.
Ralph Lauren announced this week that they would begin a subscription rental box. Perhaps a little late to the game, but they now own their customer in a new way. Not from someone buying it in a department store or in the Ralph Lauren stores that began when his flagship store opened in 1986, not on the website but through a new relationship curated for the consumer.
My eyes are on the brands. Think of the stores as becoming the pass through which they grab a percentage of the consumer transaction. They will have to change dramatically to own those huge brick and mortar spaces as their business model have dried up. There is a big opportunity here for brick and mortar to really get out the drawing board because the brands have taken over.