RETAIL BECOMES RISKY BUSINESS
Woe for stores as shoppers look elsewhere for inspiration
stores like Macy’s and J.C. Penney — anchors for the malls — are also closing stores.
Sears Holdings Corp. has said there’s “substantial doubt” about its future, but thinks its plan to turn around its business should reduce that risk.
The number of “distressed” retailers — those with cash problems and poor credit profiles that are facing strong competition — is at the highest rate since 2009, says Moody’s Investor Service.
“Retail is increasingly becoming boring,” said James Reinhart, CEO of the usedclothing marketplace thred UP. He says much of the merchandise at stores is homogenous, while online “each day there’s a whole new assortment.”
Department stores make regular announcements about the next way they’re going to win customers back, like offering more athletic-inspired clothes or adding tech areas.
But they’re fighting a market in which people are already buying fewer clothes, spending online or at discounters when they do, and demanding more personal and convenient ways to buy.
Brands like Stitch Fix and | Bonobos offer curated selections based on people’s preferences, while companies like thredUP capitalize on shoppers’ increasing willingness to buy secondhand items from mall brands like J. Crew, Anthropologie and Athleta at big discounts.
Deloitte estimates that the nation’s top 25 retailers have lost $200 billion to the smaller entrants to the market over the last five years.
It was on social media that Dao discovered the online brand Everlane and liked its simple but modern looks. It’s also how she found shoes by Freda Salvador that she spent $300 on — three times what she usually pays.
“I am trying to find someone that appeals to me,” she said. “It’s not, ‘Oh, everybody is doing this.’ It reflects my values. It reflects my personal style.”
That connection is something shoppers may feel is missing from the brands they’re turning away from. Bill Taubman, chief operating officer at mall operator Taubman Centers, expects more store closures. But as much as shoppers gravitate toward online brands, he has doubts about their sustainability.
“Customers forget about them very quickly,” he said. “That’s why the internet guys are thinking of opening stores.”
Indeed, online brands like Bonobos, jeweler Blue Nile and eyewear seller Warby Parker have been setting up showrooms. Even KUIU plans a 30-city tour with an 18-foot trailer that expands to a showroom as a test for traditional store locations.
The hybrid model is gaining ground, but online retailers are also figuring out whether to go with traditional stores or showrooms where shoppers try on clothes and then have their purchased delivered.
“We quickly discovered in the testing days of the Guideshop concept that guys don’t need that instant gratification of walking out of the store with something right away,” said Antonio Nieves, chief financial officer at Bonobos.