The Adjustments Traditional Retailers Need to Make to Thrive in the Changing Marketplace  

Retailers have tried it all: retail-tainment, personalization, regionalized merchandising, omni-channel, service-service-service. But nothing seems to be working. Retail is nearing extinction–traditional retail, that is.

But why? Why can’t retailers figure out how to succeed? Macy’s recently announced that it was closing 68 stores and eliminating more than 10,000 jobs across the U.S. Other major retailers scheduled to close more than 100 stores include: Aeropostale, American Eagle, Chico’s, Children’s Place, Finish Line, Sears/Kmart, Office Depot/Office Max, Men’s Warehouse/Jos A Bank, Walgreen’s, and Walmart. After mergers, acquisitions, downsizing, cost-cutting, and an array of other failed strategies, the former tried-and-true brick-and-mortar club is crumbling.

We’ve been hearing for years how Barnes and Nobel, and books in general, are being replaced by tablets; how grocery stores are being replaced by home delivery; and how mom-and-pop shops are obsolete. Department stores, specialty stores, outlet stores, big box, little box, no box—are we out of options?

Shopping vs. Buying

Apple did reinvent retail once with demo tables and open-format selling, the genius bar, and wireless checkout. Former chief executive officer Ron Johnson tried to apply the Apple magic to reinvent JCP, and newer brands like Warby Parker found a way to make eyeglasses and eyeglass shopping sexy (ok, maybe not sexy, but definitely more cool). Pop-up shops take over cities during the holidays, and showroom concepts are creeping into the mix (Peloton, Tesla).

But shopping, which used to be considered a leisurely day out browsing and socializing, has finally met its match—buying. The act of making a purchase has been upgraded by Amazon and digitally based brands. Why get into a car, drive, park, shop, price, carry, and perhaps return, when you can press, click, and swipe your way into purchasing the items you desire? Why were glamorous department-store shopgirls replaced by online live chat helpers? And why don’t customers miss the yesteryear of retail? Convenience? Speed? Selection? Ease? Yes.

Building Better Retail

So what can be done? The answer is not more or less retail. It’s not leaner staffing, decentralization, or even deeper sales–it’s better retail.

What is better retail? Concepts like STORY in New York City are coming close. That business model rotates merchandise nearly every six weeks around a brand or theme, featuring new and unique products sourced directly during pitch nights hosted by the owner. A Bathing Ape is a streetwear brand/store that limits access and garners hours-long lines. Nike runs on with collectible shoes, limited edition launches, sports stars, and digital expertise for personalization. Build-A-Bear and American Girl got kudos for being early adopters of retail change. And now, Best Buy is taking a stand against internet sale-hijacking by using in-store Wi-Fi to intercept Amazon searches and send in a skilled expert to close the sale and offer Geek Squad services and worry-free insurance programs.

It’s a start. Concepts used by Rent the Runway, Stitch Fix, Fabletics, and the array of other subscription and curation businesses are shifting the paradigm. Customers want more than selection, price, and convenience; they want help choosing.

The Crucial Relationship Between Brands and Stores

It’s time for brands to step up. They used to be the drivers to retail. Want a Polo shirt or a Coach bag? Go to a store. Need more Bobbi Brown concealer or Tom Ford fragrance? Go to a store. Levis jeans? Keds sneakers? Timex watch? Maidenform bra?

But most design houses have abandoned their department-store partners and fled to online and vertical specialty, while the department stores themselves divorced from brands with private labels and margin pressures.  In trying to protect their own individual successes, both brands and department/retail stores are failing.

Products and stores need to have a symbiotic relationship, because more is not more anymore. Brands can’t sell their products to stores, go into big box and outlets, build their own shops and sites, open up an Amazon page, and still be considered desirable. It is a slippery slope when products and brands try to grow through distribution and tiered merchandising/derivative business models.

And, in turn, department stores need to learn a lesson from web-birthed brands/stores like Adore Me or Carbon38. They do the thinking for you. Department stores have not figured out how to make and personalize product selections for their customer; instead, they allow shoppers to roam aimlessly, reading signs and flagging down random staff, only to rake through racks of misplaced merchandise looking for their sizes and color preferences.

The Evolving Dress Retailer

Imagine that stores could emulate the curation method or private-shopper model on a grander scale. That customers could be directed to an area where merchandise is presented according to their lifestyle profile and prior purchase preferences and flavored with predictive recommendations. Then imagine if customers could purchase their products on the spot in one step and have them sent in the right color and size directly to their homes.

It would be the best of all worlds. Shoppers could shop, not just buy: they could touch and try on and get what they wanted, when they wanted it, in the environment and with the attentiveness that the digital space currently cannot provide. But 3D and virtual environments may make this scenario possible sooner than you think. And if stores like Macy’s don’t figure it out, Google and Amazon will. They are already looking to enter the retail space and, when they do, they will start to own it.

What if Google became the next global retail giant? Opening flagships or showroom/distribution centers with exclusive showcased brands, merging the physical with the virtual space, and adding Google Goggles for curated/customized experiences based on shoppers’ prior searches and online activities?

What if Amazon Go creates physical spaces with food and related products: chef appearances, product demos, food tastings, and curated ingredients assembled based on customers’ selected choices–all purchased in one swipe (Prime) and delivered via drone to their homes by the time they got there?

It’s already happening. Tesco in South Korea set up virtual grocery stores that allow commuters to select and pay for food items via smart phones, and delivers the food directly to their homes by the time they finish their commutes.

The lesson for retailers is to evolve. To embrace technology—not as a tool, but as a channel and service. Retailers need to build true relationships with brands, become more exclusive, offer reasons for shoppers to shop and not just buy. Retailers need to stop competing with websites. They need to be better retailers.