Shop ‘til you drop: the future of retail

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Shop ‘til you drop: the future of retail

Shop ‘til you drop: the future of retail

Shop ‘til you drop: the future of retail

Zoe Haworth

Shop ‘til you drop: the future of retail

Zoe Haworth

Zoe Haworth

Shop ‘til you drop: the future of retail

By Kendrah Villiesse

Massive red signs were scattered across the walls and clothing racks at American Apparel’s Wicker Park store, reading “Sale” and “40% off entire store.” Customers slowly rummaged through the merchandise, hoping to grab their favorite pieces before they were gone.

Sizes were dwindling on the racks, styles were being marked down to unheard-of prices while a mellow and sorrow vibe filled the small shop.

 “There is a whole group of young fashionable individuals who center their style around American Apparel, so it closing is the end of an era,” said Mariah Holstein, a teaching assistant at Roosevelt University, who has stopped at the Wicker Park location frequently since the announcement. 

The scene was replicated all over the country. When fans heard the news of American Apparel’s scheduled April 2017 closing date, they ran to their nearest store to snatch whatever they could, posting their finds on Twitter and informing others to grab everything while it is still there.

Other store closings are on their way. In the first few weeks of 2017, a cluster of retail stores including industry staples such as Macy’s, Kmart and Sears and younger fashion spots such as Wet Seal and The Limited announced the companies were either going out of business entirely or closing some or all of the brick-and-mortar stores. While the reasons for diminished sales vary, stores all have one thing in common: They’re losing out to online shopping, which, according to a 2016 Pew Research Center survey of U.S. adults, is something that approximately eight out of 10 Americans have done. 

Not every retail store is in trouble, but those that haven’t adapted to new consumer behaviors are more likely to be on the chopping block, said David Bell, professor of marketing at The Wharton School at the University of Pennsylvania.

 “[With] the rise of online and millennials and different modes of shopping, people are seeing that the in-store experience is potentially being less relevant to traditional brands,” Bell said.

The cavernous department stores that used to draw crowds are now seen as exhausting when compared to the alternative shopping options.

“[Stores are] being transformed into something different,” Bell said. “People still like physical spaces to experience brands, they still like physical interaction, but the idea of going onto a multi-product retail like a Macy’s and rummaging through the rack and seeing if they have the right size, in a really low-experience environment, is a business model that is becoming less relevant and less desirable.” 

Macy’s is one store trying to reinvent itself by promoting a seamless shopping experience between online and brick-and-mortar outlets, according to its most recent quarterly earnings report. To improve the Macy’s shopping experience, the chain announced in August 2016 the closure of 100 of its 700 retail stores, so it could direct resources into top-performing stores, the report stated. 

But whether that will succeed remains to be seen. According to a Jan. 4 Macy’s press release, Terry J. Lundgren, chairman and CEO of Macy’s Inc., said the decline in foot traffic has continued. 

Anna Marevska, founder of Fashion Files, a popular Chicago-based magazine, briefly worked for Macy’s and thought its customer experience was a letdown.

“The problem is not because it is a brick-and-mortar store; it is because they have not found their marketing and they haven’t been targeting their audiences right,” she said.

The customer treatment, store layout and merchandise collection are all factors that affect foot traffic in Macy’s and other department stores are dying down, she said. Online boutiques have the advantage over brick-and-mortar stores as they can

cater to niche markets and quickly adapt to trends, she noted. 

 “Stores like Net-A-Porter or even Asos curate to show the consumer how to buy, what to buy,” Marevska said. “Brands like Macy’s and The Limited are lacking that. They are a little bit stuck in the early 2000s, [and] unless they do a dramatic change with the way they treat their customer online and offline, it is not going to work out. The world is going in a different direction.”

Consumers, especially those keeping up with fashion trends, do not want to look like everyone else. Another reason that large department stores are losing customers  is because they are boring their usual customer, according to Allison Leahy, a fashion studies professor at Columbia. Last holiday season, part of the reason Macy’s was downsizing so much was because the store did not see a normal level of sales both online and in stores, she said. 

Customers prefer to click on their computers or phones rather than fight the crowds, she noted.

 “Online purchasing—they are just so strong,” said Leahy. “The competition is coming from Amazon.” 

Not all brick-and-mortar stores are struggling to stay afloat; shops such as Nordstrom and outlets such as T.J. Maxx are doing exceptionally well and have both online and physical shops. Both offer unique benefits to shoppers. Nordstrom is noted for its exemplary customer service, earning a place in the 2013 listing of the 25 best companies in America, compiled by The Motley Fool investment site.

T.J. Maxx, known for its “high fashion for less” advertising, has nearly eight years of consecutive growth in earnings, according to an Aug. 20, 2016 article by Business Insider.

The discount-orientated brand has latched onto a formula that appeals to many millennials—fashion that is fast, unique and cheap.

 “People are looking for things that are low-cost that they don’t really have to care about,” said Kendrick Hagwood, a sophomore fashion studies major. “People want stuff that is stylish, people want stuff that is cool, but people don’t want to pay a lot for it.” 

Millennials are emerging as critical to a retailer’s success, and they have a clear preference for online shopping, as evidenced by a 2016 joint survey by UPS and comScore, a marketing research firm. The survey of 5330 panelists found that 54 percent of millennials had made a non-grocery online purchase in the last three months, compared with 49 percent of non-millennials. 

For shoppers of all ages, the convenience of online shopping is a key factor. As Bell noted, “We don’t really to go to Walmart anymore. I can go to Amazon.com and buy staples and ship to my home; I don’t need to go to the mall anymore, I can go to Farfetch.com and buy all of my clothes.” 

The reason for the drastic change in consumer behavior also has to do with social media being one of the most common forms of communication, said Jaeha Lee, associate professor of apparel, retail merchandising and design at North Dakota State University. 

“Many brands and retailers are doing promotions with social networking services and social media,” Lee said. “It is easier, more convenient, and is more interactive. [Stores] can communicate easily with social media, and it is more friendly [to the user].” 

Bell said social media is free advertising for a brand because the brand’s audience now has audiences of its own in the form of followers.

 “In the digital economy, if 100 people come into a store, at the end of the day, maybe 10,000 people know about the brand,” Bell said. “If a person came into the store and maybe blogged or posted on their Instagram feed, where they photographed what was going on, it brings much more amplification out of a physical space than it used to.” 

Amazon and eBay are the leading online destinations, according to July 2016 research by comScore, and it’s easy to see why: Both offer an immense variety of merchandise at a variety of prices and emphasize good customer service. 

Amazon’s quick deliveries and variety of products are the reasons it ranked No. 1 in 2014 for University of Michigan’s American Consumer Satisfaction Index, according to a Dec. 20, 2014, article from Market Watch. 

 “The main thing that makes [these stores] so successful is that you can get stuff for cheaper,” Hagwood said. “You can get stuff that you can’t necessarily get anywhere else, you can even get nice stuff for super cheap.” 

As digital shopping continues to gain ground, the move away from brick-and-mortar storefronts is likely to be painful and displace many workers.

With the closing of American Apparel’s 110 stores and their Los Angeles headquarters, 3,400 American factory positions will be lost, according to a Jan. 14 article in the L.A. Times. However, online retail jobs are increasing, according to a Dec. 22, 2015, study from the Department of Labor, which found a 27.6 percent increase from 2005–2015. 

For apparel manufacturing in America, employment has decreased by more than 80 percent from 1990 to 2011 alone. However, President Donald Trump’s plan to incentivize American manufacturers to stay in the U.S. may change those numbers. 

 “The current administration is big on trying to retain and encourage development of American brands and American manufacturing,” Bell said. “There have been pretty high-profile stores that are going by the wayside, which would indicate that the value proposition is not really designating with the customers that are doing the spending.” 

The future of American manufacturing factories for apparel will be based on what the consumer is going to want to spend, and the future of manufacturing will affect the future of American-based retail.

 “Consumers are looking for low-cost; they are not looking to pay the cost to make a product in the U.S.,” Leahy said. “I don’t think consumers will shift their buying habits in order to buy U.S. made products.” 

If retail stores are nimble enough to change, they can increase their longevity by creating cheap and chic garments and accessories for their customers.

 “If [a place] like Macy’s or The Limited wants to appeal to that chic customer, they have to be more different—they have to offer something more unique,” Marevska said. 

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