Pandemic tests shopper loyalty for brands
NEW YORK – When Archie Jafree heard that Lord & Taylor filed for Chapter 11 bankruptcy in early August, he was sad about the fate of the storied retailer with roots dating to 1824.
Still, the 36-year-old northern Virginia resident acknowledged he hadn’t shopped there in months, preferring instead to go to Nordstrom and Zara, where he said the customer service is better.
“It had good quality clothes,” Jafree said of Lord & Taylor, “but they hadn’t evolved with the times.”
Many shoppers like Jafree are seeing iconic labels vanish or become mere shadows of themselves, driven in part by a pandemic that has shoved them into bankruptcy but also by changing consumer habits that put less emphasis on brand names and more emphasis on experience.
So far, more than 40 retailers have filed for Chapter 11 this year, including roughly two dozen since the pandemic. That’s more than double what was seen for all of 2019.
Lord & Taylor announced on Thursday that it was liquidating its business and closing all of its remaining stores. J.C. Penney filed for Chapter 11 in May and announced plans to permanently close nearly a third of its 846 stores.
Ann Taylor parent Ascena Retail Group said it would close all of its Catherines stores, a “significant number” of Justice stores and a select number of Ann Taylor, Loft, Lane Bryant and Lou
& Grey stores. And Brooks Brothers, which will be sold to the nation’s largest mall operator Simon Property Group and licensing firm Authentic Brands Group, will shrink to about 125 stores from more than 400.
Although loyal customers bemoan their loss, the brands have been losing favor for years because they hadn’t kept up with the online buying shift and failed to stand out. The pandemic forced nonessential retailers to close this past spring in order to mitigate the spread of the coronavirus, pushing them further in peril.
Before the pandemic, shoppers were faced with an abundance of choices online and were becoming less loyal to clothing brands, particularly those that were stuck in the middle. Shoppers were also focused on getting the best deals, often waiting for merchandise to go on sale before they were willing to buy – a habit sharpened during the Great Recession.
According to a March survey by Mckinsey & Co, 40% of the 2,500 shoppers polled in France, the United Kingdom, Germany and the U.S. tried new brands or made new purchases with a new retailer; that number was 46% for U.S. shoppers.
“The ability to shop and get information online taught consumers more options. Retailers have been reliant on promotions and they have created a monster of promiscuous shoppers,” said Steve Dennis, president and founder of Sageberry Consulting, a retail consultancy.
Now, the pandemic is testing brand loyalty even more as shoppers, worried about going to physical stores, want quicker deliveries and curbside pickup, said Robert Passikoff, president of brand research firm Brand Keys.
Amber Atherton, CEO at Zyper, which connects brands with the top 1% of their fans and enlists them to become brand ambassadors, said shoppers have been increasingly hanging out in community groups online and the pandemic just accelerated that trend. She cited Gucci’s recent collaboration with tennis mobile game Tennis Clash, where shoppers can buy exclusive Gucci outfits within the game as well as on the company’s website.
To build shoppers loyalty, brands need to “create delightful experiences online,” Atherton said.
Emily Mckenna, 22, a recent college graduate from Omaha, Nebraska, said she’s a big fan of Asos, an online-only clothing brand, because she likes the video feature that shows what the clothes look like on models.
She also likes shopping at the J. Crew outlet that’s about a 30-minute drive from her home, but she said she’s buying more online now because she doesn’t feel comfortable going into stores and she also sees more options for deals.
But Mckenna does worry about the hallowing out of the middle-priced brands and what that means to shoppers who want quality but can’t afford luxury brands.