The holidays are upon us which officially makes it SHOPPING SEASON. With a shortened window between Thanksgiving and Christmas, we’re all scrambling to check off our naughty and nice lists.
With shopping top of mind, you might be wondering, what’s happening in retail? Is it still a Bird Box-esque apocalypse or can we finally take our blindfolds off and things will look better?
TL;DR: Parts of retail have died. And other parts are thriving. Retail is way more than just bricks-and-mortar and malls these days, and it's becoming increasingly fluid, experimental and cohesive across every touchpoint.
Not Too Long; Want to Read: The estimates for 2019 holiday spending are making Kris Kringle happy—the NRF is expecting a 3.8-4.2% increase in sales YOY which equates to ~$730B. And overall retail sales have grown almost 4% each year since 2010.
NRF
So what’s the real story? Retail is NOT DEAD. But, there have been many casualties through its evolution.
Pour one out for Sears, Brookstone, Nine West, Forever21, A'gaci and Claire's—the most mally mall stores there ever were— that have recently declared bankruptcy. We're shedding an even sadder tear for iconic luxury stores that were NYC staples: Barney’s and Henri Bendel. Neimans, if you die, Dallas might never get over it.
And even if they haven't gone bankrupt yet, it's estimated that 9,300 store locations will close this year across a variety of brands.
Many of these brands were unfortunately inextricably linked to their store in a mall; they didn't exist in any bigger way to their consumers than being near the food court.
It's estimated that 1 in 4 malls will be gone in the next 5 years. So, what happened to the "peak mall" of the 80s (which Stranger Things S3 captures so well) and the Clueless-centered 90s?
Mall layouts were typically "anchored" around major department stores. But when those anchors turned into deadweights, the dominoes started to fall.
Additionally, as people's habits started to shift, other draws of the mall started to be less appetizing—like food courts that offer 1,000 calorie Cinnabons and movie theaters (Netflix, amirite?!). Yes, online shopping raked in some cash, but it still only counts for 10% of retail sales, so that isn't the one and only reason.
There were other factors plaguing malls, like the major over expansion due to favorable tax changes in the 50s. If you want to go even deeper on the history of malls in America, read this, this and this. It's quite fascinating.
What it boils down to is that our love for shopping hasn't changed—it's the way we're shopping, and what we expect, that has.
Omnichannel has become a huge retail buzzword in the past few years, which is defined as a "multi-channel approach to marketing, selling, and serving customers in a way that creates an integrated and cohesive customer experience no matter how or where a customer reaches out."
ANA
As you can see from the chart above, stores evolved from one touchpoint to multiple touchpoints—growing from just a physical storefront to include online stores accessible on any device, to now include social media brand profiles, and other forms of discovery like catalogs, search, influencers and email marketing.
This has created a customer-tracking conundrum. To become truly omnichannel, it requires a company to have a POS system that connects all of the different touchpoints along with matching online and offline data as best as possible to create a singular viewpoint of their customer.
The real importance of omnichannel, though, is that is should impact both the shopping journey AND the brand experience. The brand experience should come from a deep understanding of what channels, places and moments their audience visits, vs. trying to cobble together a consistent brand experience channel by channel.
Who does this well? Apple has been and will likely always be a shining example of consistent brand experience from its sleek stores to their simple products to the beautiful packaging and everything in between.
You might be shocked by this example but a 90s brand that kills it in the experience department is American Girl (I had Samantha, anyone else?!). They created a world both within their products and across their brand touchpoints.
The original dolls came with a book of her story in the context of history, the clothes and accessories matched the time period. You could also buy matching clothes for yourself. I even had a Samantha cookbook of Victorian-era treats like Johnnycakes, which are surprisingly tasty.
But it doesn't stop there, at their retail locations you can have tea with your doll, both of you can get your hair done and if your doll ever gets hurt you can send her to the "hospital".
For a brand like Disney, this could look like using DisneyTV+ viewership data to influence what products to buy in retail, what movies to see in theaters and what attractions to visit at their parks.
What are other ways brands are winning at retail?
Experimenting with experiences. Canada Goose created -13F degree "cold rooms" in key stores for visitors to test the jackets in inclement weather.
Yeti built a brand museum in the heart of its hometown of Austin, where you can wander through a series of videos and products all telling the #builtforthewild story. You can get Yeti items customized on the spot and you can also grab a beer at their outdoor bar.
Nordstrom launched "Local", stores that sell services like alterations, customizations and manicures, not clothes.
Photo Cred: Canada Goose
And of course, we can't forget retail's favorite strategy—pop-ups. Some say this is the "retail environment of the future" for a lot of attractive reasons: you can use pop-ups for product testing, evaluating market fit and to build brand buzz without getting locked into a long-term lease.
My favorite pop-up example of late comes from Outdoor Voices, an activewear brand whose mission is to get the world moving by #DoingThings. During SXSW, they launched an AR pop-up that was only accessible if you went outside and hit up certain trails in Austin.
Founder of OV, Ty Haney, fully understands the power of building a brand across many touchpoints. In an interview with the New Yorker, she says: "How do we grow a Doing Things community that could be ten times what revenues are...And then, over time, we understand the correct way to get them into product?"
"Customers, she pointed out, already envisioned the brand as a person—people often wrote in to say that OV felt like their best friend. 'Internally, we talk about OV as the hiking buddy who brought the snacks.'"
Photo Cred: Outdoor Voices
With every death comes a rebirth, and with many things, it all comes full circle.
Hudson Yards, a high-end shopping center that describes itself as a "triumph of culture, commerce and cuisine", descended on NYC this year. And not far away in NJ the most expensive US mall just opened called "American Dream" (how ironic). It boasts the largest indoor ski hill in the Western Hemisphere, a Nickelodeon universe with rollercoasters and a water park that is opening soon.
Toys "R" Us is a phoenix rising from the ashes with a smaller and more nimble business model, which Adweek reports "features interactive toy displays, play spaces and room for brand demonstrations and events."
There is also a growing crop of DTC (direct-to-consumer) brands like Allbirds, Everlane, Glossier and Away that are now opening physical stores, dubbed "clicks to bricks". JLL reported to RetailDive that digitally native brands will open more than 850 stores in the next five years.
This has been proven to have an impactful halo effect on web traffic, showing that all touchpoints really do work together and that retail really isn't dead.
What does this all mean? Change is truly the only constant these days. Take risks with new store formats, nascent technologies and incremental services in addition to the product you sell. Adapting to your audience's shifting habits is a must, but it's imperative that it remains a cohesive brand experience across every touchpoint.