On Wednesday, March 14, 2018, The Underfashion Club hosted an open discussion at the Harvard Club in New York City with Sidney Morgan-Petro, Senior Retail Editor at the London-based trend forecasting company, WGSN. Morgan-Petro led an exploration of the turmoil in retail stores. Explaining how retailers in the U.S. are dealing with all the dynamic changes in the purchasing patterns of consumers.
To begin, Morgan-Petro shared some interesting statistics affecting retail stores for 2017, including the fact that about 3,000 retail stores had closed that year. Yet during the same year retailers opened over 1,300 more stores than the number closed. There was actual growth in retail. She also stated that in 2017, 42% of retailers have actually added stores, while only 15% have gotten smaller.
Morgan-Petro says that we are experiencing – not an Apocalypse – but rather a Transformation within the retail industry as consumers are shifting their spending from goods to experiences.
How is Retail Transforming?
Morgan-Petro said that retailers are generally transforming in 3 ways:
- Shifting their Business Models from selling products alone, to selling services
- Right-Sizing their Operations in order to better balance their businesses
- Creating Experiences within their stores that mirror the desires of the newer generations and at the same time, creating new channels
Shifting Business Models
When discussing shifting business models, it’s very worthwhile to review some of the innovations brands are taking. For example, some shoe stores are now offering shoe storage, shoe rental services, and shoe repair services, thus expanding their revenue stream.
Some clothing stores are offering monthly subscription clothing rental services that allow consumers to mix and match outfits by strategically selecting rented pieces of clothing to accent their own.
Luxury handbag stores have always offered repair and cleaning services, but now they are bringing the service “workshops” right onto the retail floor, where consumers can see their products being repaired and serviced.
Some clothing retailers are shifting to selling services rather than goods in specialty sponsored stores. A large international clothing chain is opening in-store, convenience laundromats for college students along with providing charging stations, beverages and music by a disc jockey on staff.
And in the lingerie business sector, some lingerie stores have embraced selling fitting services, consultations, educational services and half-sizes to lure consumers to their stores along with their traditional branded lingerie.
We’ve learned that both Millennials and the Z-Generation are more inclined to buy experiences rather than products. These younger people are more concerned with the over-all experience of buying the product rather than the actual product itself.
An example is that of a clothing store that sponsors, creates and administers music festivals and experience expositions for which they are charging a premium.
Increasingly, the differentiation between one product and another is not the product, but how and why it is made.
Here are a few statistics:
- 65% of consumers globally try to support brands that are purposeful
- 57% of consumers will support or boycott brands because of its stance on a political issue
- There is a 30% greater tendency for consumers to purchase a brand, based on its beliefs, than there was just 3 years ago
Retailers must convey their message of relevance to these new consumers by making their stance know on ethical behavior, using factories that have policies of fair pay, humane treatment, and offer employees opportunities for personal growth.
These new consumers purchase with purpose. They care who the brand’s preferred charities are and they make purchase decisions that align with their own. They want the brands that they purchase to facilitate action by providing additional services.
The Retail Apocalypse?
No. It’s a Retail Transformation
This retail transformation is happening now and will continue to build and evolve as the needs and demands of the new generations of consumers grow louder. This is a call for retail innovation!