Now What, Big Retail?
There is much wringing of hands, gnashing of teeth and rending of garments as sales results (or lack thereof) are reported by the country’s major retailers. The big losers, it is tempting to think, are the big retailers and those malls which rely on them to anchor their destinations. Macy’s is in freefall, of course. That train left the station long ago. It's just chugging slowly, methodically along the track of supervised decline. Sears is another duh!. The answer these retail gurus posit: Close stores, lay-off staff, put more price pressure on vendors. In short, sell your unique reason for being, whether it's the Craftsman brand (quick cash for Sears) or service, location, selection and quality (Macy’s).
I say, look rather at the winners. Costco is winning and not just because of pricing efficiency: It treats its sales associates respectfully, fairly and well. TJ Maxx is winning and not just because of pricing efficiency: It treats its vendors and customers respectfully, fairly and well. And, gee whiz, some of those mall developers who used to depend upon major retailers to bring traffic to their destinations are winning and not just because of pricing efficiencies based on lowering rents to their tenants: They are learning to re-rationalize their space and give customers what the Macy’s and Sears of the world won’t: Experience. As the big guys move out, they are re-imagining those holes in the once boilerplate footprint as eateries and cinemas.
Those of us in the consulting space have been recommending for a decade at least that engagement, nay! enchantment is what real retail needs in order to compete with the efficiency and ease of on-line buying. We have been voices crying in the wilderness. Now, the wilderness is slouching nearer and nearer. Macy’s is closing 100 stores and laying off 10,000 people. That’s 10,000. Sears has even more store closings rumored. More people offed. These steps come at the exact time when human interactions can make a profound difference in our retail experience and, indeed, lives, as we shuttle from one place to another, shuffling through our play list and ignoring one another to the best of our ability.
In our practice, our New Year’s resolution is to give up trying to crack these self-confident proponents of losing propositions, those retailers who are selling the counter-intuitive (and dumb) proposition that it's fully possible to shrink your way to growth, if you keep sponsoring parades and firework displays and thus attempt to use guilt and nostalgia to make people shop with you. (Note to Terry at Macy’s: You’re making it worse. Every time we watch Miracle on 34th Street and remember what you once were, we get even more of a nosebleed when we try to find a salesperson who can actually help us – and wants to – in your store.) Instead, we’re focusing on “Bright Spark Innovation,” e.g. we’re looking at what is working at a select roster of retailers willing to move good to better and better to best. Watch this space.