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BoF A Fashion World Without Department Stores 

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BoF A Fashion World Without Department Stores 

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Hello BoF Professionals, your exclusive 'This Week in Fashion' briefing is ready, with members-only analysis on the key topic of the week and a digest of the week's top news.
Neiman Marcus is on the verge of filing for bankruptcy protection, becoming the first major American department store chain to succumb to the coronavirus crisis, which has forced thousands of store closures and crashed consumer demand for non-essential luxury goods.

Neiman has long struggled with a hefty debt burden, now amounting to $4.8 billion, assumed under 15 years of private equity ownership, making it particularly vulnerable. Indeed, the weight of more than $300 million in annual interest payments has made it virtually impossible for the company to service all of its debt and turn a profit. The company missed an interest payment last week and has furloughed most of its 14,000 workers.

According to market reports, Neiman is currently in talks to secure over $500 million in bankruptcy financing and lenders expect the business to survive, perhaps under new ownership. The group's trophy assets, Bergdorf Goodman and MyTheresa, could be the target of opportunistic acquisitions, and the distressed Neiman Marcus business could be snapped up by rival Saks Fifth Avenue. But the outlook is grim.

By no means is this former titan of luxury shopping alone. Lord & Taylor, which let its entire executive team go this month, is considering bankruptcy. J.C. Penney has been weighing debt-restructuring options, including Chapter 11 protection, and is currently negotiating a debtor-in-possession loan with multiple banks to ensure liquidity for its operations during bankruptcy. Meanwhile, Macy's may borrow against some of its real estate to keep its head above water.

Nordstrom was comfortably profitable before the crisis and, despite its $2.7 billion debt load, is not immediately at risk of defaulting. But, like many of its peers, the chain is suffering severely from store closures and has been forced to cancel orders and defer payments to vendors.

It's not just American chains that are veering towards collapse. In the UK, Debenhams filed for administration and liquidated its Irish business earlier this month, while House of Fraser was forced to shut seven of its 59 branches even before lockdowns began. In Germany, Galeria Karstadt Kaufhof filed for administrative insolvency in early April. And, in recent weeks, Australia's Myer has shed 10,000 workers and struggled to stay afloat.

The current crisis has been crippling, reducing sales to virtually zero. But the root of the problem goes far deeper. Many of these chains have been on the wrong side of history for years.

Over the last decade, the rise of e-commerce has not only eaten into sales but fundamentally rewired consumer behaviour, meaning the fundamental problem that department stores once solved is no longer a problem. Who needs to buy everything under one roof when Amazon is the new "everything store" and specialist retailers are only a click away? What's more, the shopping malls that department stores so often anchor have become increasingly irrelevant to a new generation of consumers for whom social media is the most popular place to hang out.

Some of the pain is also self-inflicted. Many of these stores have failed to adequately invest in e-commerce or otherwise bungled their digital strategies. Meanwhile, as major brands increased their focus on direct-to-consumer sales channels, too few department stores pivoted their business models from wholesale to concession, allowing brands to run their own shop-in-shops.

Many of these chains have also displayed an incredible lack of imagination. Shopping across a selection of brands remains highly valuable to consumers, but as shoppers became more sophisticated and brands launched temple-like flagships, too many department stores continued to offer homogenised merchandise in uninspiring settings, failing to deliver the curation, experience and entertainment factors that made outliers like Selfridges and Dover Street Market (the anti-department store department store) appealing places to spend time.

Now, as coronavirus accelerates the decline, traditional department stores are almost certain to have a radically reduced footprint in the fashion industry of the near future: some will be forced to significantly scale back their store counts, while others will simply shutter.

What will the fashion landscape look like as these once-mighty department stores falter?

Consumers may not miss these stores too much. Convenience is now better delivered online and the sense of curation and discovery that department stores once offered long ago shifted to platforms like Instagram and its army of influencers from whom shoppers now get their cues.

Designers may not shed too many tears either. Few emerging labels will miss the onerous terms and chronically late payments to which department stores have long subjected them. Then, there's the matter of discounting. Department stores, particularly in the US, have played a corrosive role in normalising perennial discounts, training shoppers away from full price and resulting in a race to the bottom that damages profitability and brand equity. Now, with a glut of unsold inventory in the market, some department stores are already breaking ranks and holding early "friends and family" sales and sending "VIP" offers on summer collections.

To be sure, department stores still account for a large chunk of sales revenue for many labels, but the waning of these chains may force more brands to deepen their relationships with end consumers, foster online communities and leverage e-commerce to build robust direct-to-consumer sales channels, which could ultimately make them far stronger.

Make no mistake, the coronavirus pandemic will result in a poorer world with less interest in fashion goods and the fall of department stores will be felt by brands big and small. And yet, when lockdowns are lifted and the economy finally bounces back, we are likely to see a resurgence in our desire to get dressed and new demand for compelling multi-brand shopping.

The space ceded by department stores will create fresh opportunities for specialised, independent, multi-brand boutiques with real points of view, sharper product selections, true personal service, engaging store experiences and real relationships with local clients and local communities, carefully cultivated both digitally and in real life - a sort of "back to the future" of fashion retail. And for many, this will be just the kind of retail experience they will be longing for when the crisis passes.
- Vikram Alexei Kansara THE NEWS IN BRIEF FASHION, BUSINESS AND THE ECONOMY
Sycamore Partners hopes to end Victoria's Secret deal. The private equity firm filed a lawsuit to argue it should be allowed to terminate the deal to acquire 55 percent of Victoria's Secret from L Brands for $525 million. The news sent L Brands stock price plummeting 16 percent on Wednesday. L Brands filed its own suit against Sycamore the following day. The apparent demise of the deal points to broader turmoil behind the scenes in the retail sector, which has been devastated by the coronavirus pandemic.

Gucci sees 22 percent first-quarter revenue drop amid coronavirus outbreak. Overall, Kering saw a group-wide decline of 15.4 percent, with Saint Laurent's sales falling 13 percent. The results highlight the extent to which Kering depends on sales in China as many brands were forced to lose their stores in January and February. Meanwhile the rate of recovery remains uncertain due to the spread of Covid-19 across the West, causing brands to also shut stores in Europe and the US.

Hermès weathers coronavirus storm better than luxury rivals. The Parisian house saw a 7.7 percent drop in first-quarter sales compared to declines of 15 percent or more reported by other luxury groups. Hermès has long been one of the steadiest performers in the luxury goods industry, in part due to its careful management of production and stocks, which have maintained its reputation of exclusivity.

Moncler hopes for rebound in second half of 2020. Analysts on average expect Moncler's sales to fall by 6 percent in 2020, better than most rivals, because most of its sales usually take place towards the end of each year. After years of strong growth, Moncler said it would shelve non-essential projects in order to achieve a 30 percent reduction in total capital spending.

British government suspends commercial evictions. The move comes after trade bodies wrote a letter to Chancellor Rishi Sunak seeking rental support. The minister added that the government is working with banks and investors to seek ways to address these issues after rent collection for March quarter date fell by 28.7 percent in the UK.

Bangladesh garment workers break lockdown to protest wages. The government launched a $588 million package to help companies in the garments sector pay staff, but manufacturers have said it is not enough. Bangladesh is estimated to lose about $6 billion in export revenues this year as retailers and brands across the world cancel orders. Meanwhile, a group of employers' organisations, unions and major brands in the garment industry are working with the International Labour Organisation to support manufacturers affected by the coronavirus outbreak.

Fashion continues to fall short on social and environmental transparency. Fashion Revolution's annual index shows signs of progress, but the fallout from Covid-19 has revealed how much the industry still needs to improve. Only 11 percent of the 250 brands included in this year's study explained how they ensure labour costs are ring-fenced in their buying practices. Less than a quarter provided details about their approach to achieving a living wage within their supply chains.

Gap suspends $115 million monthly rent payments. The retailer said it may not have enough money to run its operations in the next 12 months. Despite furloughing employees and closing its stores, Gap is in talks with landlords to defer payments, change lease agreements or in some cases terminate the leases and permanently close some of the stores.

Target's online sales jump as shoppers stock up from home. The big-box retailer expects to gain market share in apparel as competitors struggle. Target has seen a 275 percent surge in online comparable sales in April so far, offsetting some of the damage caused by shuttered stores. Even so, Target warned that its margins would suffer due to rising costs like temporary wage increases for frontline workers.
THE BUSINESS OF BEAUTY
Clean beauty product sales are up 11 percent. Despite the beauty industry's overall decline of 14 percent, clean beauty's commitment to product safety is resonating with anxious consumers. Brands like Beautycounter and Herbivore report an uptick in skincare and body care categories prompted by consumers who, during a public health crisis, increasingly consider cosmetics ingredients.

Luxury prestige beauty brands see increased demand. With spas closed, consumers are turning to high-end brands like Biologique Recherche for at-home facials and virtual consultations. La Prairie and La Mer are likewise outperforming competitors due to standout online sales that are offsetting department store closures.
PEOPLE
Lululemon's chief financial officer departs. Patrick Guido is stepping down as chief financial officer of Lululemon effective May 8 after two years in the role, "in order to assume a leadership position outside of the apparel industry," according to a company statement. Lululemon has begun its search for a successor. In the interim, Meghan Frank, senior vice president, financial planning and analysis, and Alex Grieve, vice president and controller, will lead the finance team and report to Chief Executive Calvin McDonald.

American Eagle appoints a chief financial officer. The brand has promoted Mike Mathias to executive vice president and chief financial officer with immediate effect. Mathias, who was previously senior vice president and head of financial planning and analysis, reports to Chief Executive Jay Schottenstein in his new role. He replaces Bob Madore, who is leaving the company but staying on in a senior advisory role through September 2020.

Boohoo announces board changes. The fast-fashion online retailer has added Kath Smith, former EMEA general manager for The North Face, to its board as an independent non-executive director effective May 1. Smith also sits on the board of JD Sports, and has previously sat on the boards of Adidas UK, Adidas Ireland and Reebok Ireland. The company also announced that Sara Murray will step down as non-executive director, with Deputy Chairman stepping in to fill her positions as nomination committee chair and senior independent director.
MEDIA AND TECHNOLOGY
Vestiaire Collective raises €59 million in latest funding round. The money, which was raised by investors including Korelya Capital, Vaultier7 and Cuir Invest, will be used to help the company break into Japanese and Korean markets while doubling down on US expansion and social commerce efforts. The company's total fundraising is now at €209 ($223) million.

Report: Amazon deploys thermal cameras to scan warehouse staff. The e-commerce giant has rolled out the technology in at least six warehouses outside Los Angeles and Seattle, according to employees and social media posts. Cases of the virus have been reported among staff at more than 50 of Amazon's US warehouses. The thermal cameras are an attempt by Amazon to contain the virus' spread without shuttering warehouses essential to its operation.

Shopify to offer loan advances for small businesses in Canada. Through the e-commerce company's financing program, 'Shopify Capital,' the advances would be repaid through future sales and would range from C$200 ($140) to C$500,000 ($350,895) per eligible merchant. Approval will be through an online application process and will take a few days, the company said
BoF Professional is your competitive advantage in a fast-changing fashion industry. Missed some BoF Professional exclusive features? Click to browse the archive.

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A Fashion World Without Department Stores

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Debt-laden Neiman Marcus seems set to be the first major American department store to succumb to the coronavirus crisis in what could become a wave of insolvencies across the sector. What will the fashion landscape look like as these once-mighty chains falter?

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Luxury firms find signs of hope in Asia. 

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Luxury firms find signs of hope in Asia. 

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https://www.voguebusiness.com/companies/luxury-firms-find-signs-of-hope-in-asia-covid-19

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What is the Future of the Luxury Department Store?

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What is the Future of the Luxury Department Store?

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In an age of instant gratification where e-commerce and Instagram shopping have been increasingly gaining market share, physical retailers and big department stores have struggled to keep customers engaged.
In the last year, household U.S. names, including Henri Bendel and Saks Fifth Avenue, announced consecutive closures - the former shuttered all 23 locations including its famous Fifth Avenue flagship, while the latter closed its women's store in lower Manhattan after just two years in operation. According to Morgan Stanley, department stores will only account for 8 percent of the apparel market by 2022, down from 24 percent in 2016.

This doesn't mean that the department store is dead, but that it needs to be reinvented with new categories and services that are designed to serve a modern, digital-savvy consumer.

The bravest of department store retailers have been embracing the changing landscape and embarking on ambitious renovation projects, giving drastic facelifts to their brick-and-mortar spaces, but also re-evaluating their purpose and relationships with their clientele.

The key to this renewed vision of the department store? Convenience, trendy and exclusive products, new categories and service-driven experiences - the retail industry's new favorite buzzword.

Plans Into Action

That's why the Galeries Lafayette Group, whose revenues have been flat over the past year, has introduced a new store concept on the Champs Elysées filled with buzzy young labels, artsy installations, personal shoppers hired via social media and Instagrammable moments, including a restaurant designed by designer Simon Porte Jacquemus and Caviar Kaspia.

Nicolas Houzé, the company's chief executive, said that this was an opportunity to answer to the challenges in the retail sector by innovating and diversifying the group's business beyond its flagship on Boulevard Haussmann.

"It was a chance for us to rethink the model of the department store," added Houzé, pointing to a shift from a brand-centric to a customer-centric approach.

Competitor Le Bon Marché has also been following suit with its "3.0 shopping" strategy which integrates curated exhibitions within its stylish Left Bank store, while in the U.S., Neiman Marcus has recently debuted a brand new concept at the Hudson Yards development in New York which brings together luxury fashion retailers, with art galleries, hotels and wellness centers.

Neiman's approached the new space as a "testing ground for experiences and services" that it hasn't provided before, including a 1,000-square-foot pavilion used to host events, a demo kitchen used for tastings and mixology classes and an array of beauty services, such as cell rejuvenating LED beds and blow dry bars.

The unveiling of all these new spaces point to the importance of diversifying into new categories and complementing a traditional luxury apparel and accessories offer within a department store, with more service-driven or cultural experiences, ranging from art to beauty, wellness, food, and beverage.

From Retail to Hospitality

According to the Future Laboratory, in the next 20 years up to 70 percent of retail will be dedicated to food and beverage, so in order to survive department stores need to place greater focus on hospitality.

"It's the idea that the social and the hospitality experience is more important than the transaction," said Tom Savigar, senior partner at The Future Laboratory, a London-based trend forecast and consumer insight agency. "We are rewiring the way we have been socialized," added Savigar, pointing to an ongoing craving for human experiences, for tactility and belonging, while at the same time expecting convenience more than ever before.

These values have also been at the heart of Harvey Nichols' renovation project in London, which has seen its flagship store transform one floor at a time: The ground floor, for instance, has moved away from luxury accessories and towards a renewed focus on beauty, including a dedicated services area, an exclusive offer of Rihanna's Fenty beauty line, as well as a new offer of contemporary-priced accessories by brands which are highly visible on Instagram like Staud. The store's designer ready-to-wear space on the first floor has also been redesigned to inspire a more intimate, boutique feeling with shop-in-shops from the likes of Loewe, Stella McCartney and Jil Sander.

The revamp is paying off - according to the retailer sales have increased by 40 percent on its women's wear floor in the last year and it's looking to continue to renovate its remaining fashion floors by integrating contemporary fashion with beauty and athleisure, as well as work with brands to create one-off pop-ups that will lure customers through its doors with the promise of newness.

Seamless Omni-Channel

But apart from rethinking the shop floor, Harvey Nichols has also recognized the importance of e-commerce to sustain any retail business and forged a partnership with Farfetch to help accelerate its digital strategy and reach a more international audience.

As part of the deal, Harvey Nichols will integrate its inventory on the Farfetch platform, while Farfetch will, in turn, help the department store introduce new services such as in-store returns and next day delivery.

It's a move that most other competing department stores, which have been more focused on delivering retail theater within their physical spaces, have been shying away from so far, with online sales only accounting for a small fraction of their revenues.

The few exceptions would include Neiman Marcus, whose online sales in the Greater New York area reached $200 million last year and Le Bon Marché, which has debuted 24 Sevres in 2017 to bring its offer online and has managed to stand out with exclusive product from the likes of Louis Vuitton and Céline which do not normally sell on the web.

But as the retail landscape evolves, e-commerce will be crucial in ensuring the livelihood of all physical department stores: "Customers still crave human interaction and enjoy the store experience, but they'll make the final transaction on their phones. So department stores need to go out of their way to create a seamless experience both on and offline, otherwise, the customer might come in a store to have a coffee but they will shop online from their competitor," added Savigar.
Cover image credit: Pixabay.

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What is the Future of the Luxury Department Store?

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In an age of instant gratification where e-commerce and Instagram shopping have been increasingly gaining market share, physical retailers and big department stores have struggled to keep customers engaged. In the last year, household U.S.

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Farfetch to offset carbon footprint of all deliveries and returns

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Farfetch to offset carbon footprint of all deliveries and returns

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Please click here if you are not redirected within a few seconds.

Huw Hughes
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Farfetch is to begin offsetting the carbon footprint of all its deliveries and returns as part of a new Climate Conscious Delivery programme.

The luxury online retail platform has begun investing in projects to offset the carbon impact of each sale and delivery, including projects planting and protecting forests in the US and Brazil, and others generating electricity from renewable resources. All projects are verified to Gold Standard, American Carbon Registry or the Verified Carbon Standard.

According to Farfetch, 85 percent of its emissions are related to shipping and returns.

The company is now working with sustainability consultancy firm EcoAct to calculate how much carbon it needs to offset.

The new programme comes as part of a wider Positively Farfetch initiative launched last year which focuses on ways to make the company more sustainable.

Other measures Farfetch is taking to reduce its carbon footprint include using more efficient packaging and shipping more products in bulk, as well as moving to renewable energy in its offices.
Photo credit: Farfetch website

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Farfetch to offset carbon footprint of all deliveries and returns

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Farfetch is to begin offsetting the carbon footprint of all its deliveries and returns as part of a new Climate Conscious Delivery programme. The luxury online retail platform has begun investing in projects to offset the carbon impact of e

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How 5 Very Different Brands Are Managing E-Commerce Right Now

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How 5 Very Different Brands Are Managing E-Commerce Right Now

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NEW YORK, United States - When it comes to e-commerce, fashion has been slow on the uptick. And yet, the channel has never been so important. The coronavirus pandemic - which has cost thousands of lives and yet-uncalculated damage to the world economy - has cut off cash flow from physical retail. This means that the rate at which consumers buy items online instead of simply researching them is rising, and is likely to continue to grow once normal trading resumes.

About 15 percent of luxury goods will be sold online this year, up from 10 percent in 2019, according to Bank of America's projections, with online sales up 30 percent year-over-year as the overall market dips 5 percent.

So, how can brands and multi-brand retailers make the most of what is, for many, their only remaining revenue source? It certainly won't be easy. Seasonal deliveries have been delayed or cancelled altogether; distribution centres are closing left and right in order to protect workers from the virus.

"From a fulfilment perspective globally, we're seeing fashion and apparel slow," said David Emerson, vice president for sales and marketing for Europe, the Middle East and Africa at Seko Logistics. "It's not dead, but there's a slow down."

Meanwhile, on the marketing front, how do you encourage shopping without seeming crass? Or shoot products to sell on e-commerce when social distancing mandates are in effect?

BoF talked to five different businesses - multi-brand, jewellery, direct-to-consumer, independent and luxury - about how they're making it work.
The Multi-Brand Retailer: Bird Brooklyn
Before coronavirus, multi-brand retailer Bird Brooklyn was struggling as it felt squeezed from all angles. Brand partners have developed their own e-commerce presence and discount sites continue to eat up market share. Today, the company is doing everything it can to maintain its existing vendor relationships while ensuring its own future.

The pandemic has hampered consumer spending, forcing physical multi-brand retail spaces to close, either temporarily or permanently, as is the case with 10 Corso Como in Manhattan. Companies like Bird Brooklyn are working with fewer resources to figure out how to improve their engagement with shoppers online.

It's not dead, but there's a slow down.

"In reality, what should have been like a year's worth of work is now going to be compressed into like a month or two worth of work," said Jen Mankins, owner of Bird, which carries a mix of independent designers and it-brands like Maryam Nassir Zadeh and Ganni. Before the pandemic, Mankin's business - including four retail locations and an e-commerce site that accounted for about 10 percent of the company's sales - was already struggling in an increasingly cutthroat climate. Today, it's in "survival mode."

Much of the work Bird needs to do, like other multi-brand sites, is to figure out how to work with existing partners to move excess inventory without relying on massive discounting, which seems more likely than ever. (Bird is considering selling items at anywhere from 20 percent to 80 percent off.) Some of Bird's brands - known as vendors, in industry parlance - have allowed it to sell products online that would normally only be sold in-store. Offering limited sales on brands that would normally never go on sale - for instance, Jesse Kamm's popular high-waisted cotton trousers - next to full-price merchandise like Ulla Johnson dresses has also helped drive e-comm sales, Mankins said. The best-case scenario? "It seems like everyone will have to accept working with zero profits this season."

"We have so much inventory and a ton of debt, and it's like we owe everybody a ton of money and the only way that it works is if we're open and we can sell it," Mankins told BoF.

Given that Bird is a small retailer, it has had to reduce its marketing expenses greatly given the sales decrease. The company has paused customer acquisition efforts, including online advertising and sponsored posts. Bird said it does not mix vendor imagery with its own e-commerce and social media imagery, and has considered asking artist and photographer friends for help shooting new content from their homes. Communicating directly with top clients, many of whom Mankins counts as friends, and the rest of the Bird community through Instagram, email newsletters and direct telephone calls has proven to be a short-term sales driver. In some cases, customers have reached out via Instagram direct message to purchase clothing. Products like cozy Rachel Comey sweaters have sold particularly well.

Bird continues to fulfil e-commerce orders through its stores, one employee working at a time, and delivers products through the United Parcel Service, abiding by social distancing protocol when working with delivery persons.

For now, there is reason to be cautiously optimistic. "We've been able to see really strong support and sales through e-comm that has basically doubled or tripled," Mankins said. "But I have no idea if that is sustainable."
The DTC Giant: Allbirds
Allbirds, best known for its wool sneakers that ignited a frenzy among tech types in Silicon Valley before exploding globally, was preparing to mark its four-year anniversary just as the coronavirus pandemic hit. The company, which has raised more than $100 million in funding since 2016, intended to add more physical retail locations to its existing 18 this year, plans that are now on pause.

As brands scramble to bolster their e-commerce operations to make up for the sales slump caused by store closures, direct-to-consumer brands like Allbirds are perhaps better positioned to ride out the fallout from the coronavirus. Still, the pandemic has affected the brand's future plans.

"Given that some of the things that have changed, we're tapping the brakes on things that are expensive from a cash perspective," Co-Founder Joey Zwillinger told BoF. "We have some big software projects internally that we're slowing down, and we have store growth that we were planning - probably 20 stores this year - and as a result of this, I think we're going to most likely do less than half of that."

It seems like everyone will have to accept working with zero profits this season.

Despite the turmoil, Zwillinger said that Allbirds is taking the slowdown as an opportunity to refocus its attention towards product development and its bread-and-butter platform, e-commerce. The company said that online sales have mirrored the slowdown elsewhere across the industry. The brand's most popular product remains its wool sneakers, although it has also sold out of a $35 merino-wool eye mask.

As unseasonable, widespread sales pop up across the retail space, regardless of category, Zwillinger said Allbirds has no plans to discount its products. "We just don't believe in sacrificing the long-term health of the brand for a quick, short-term cash fix or a quick short-term bump in sales," he said.

Instead, its promotions are taking the form buy-one-give-one purchases and other donation options to benefit healthcare workers at the front lines of the pandemic. As a certified B-corporation that pledged to go carbon neutral in 2019, Allbirds can use these acts of corporate responsibility as a marketing tool, too.

In terms of straightforward customer acquisition, the company plans to maintain its existing advertising through Facebook, Instagram, Google and podcasts, although the team is "looking at various expenses and some of the big, fixed brand marketing expenses that are difficult to rationalise when sales are down dramatically."

Allbirds also got lucky with its supply chain. So far, it hasn't missed production targets as its best-selling footwear is produced in Korea, where the outbreak was mitigated with rigorous health monitoring.

"They were essentially checking everyone's temperature every single day and monitoring everyone's health," Zwillinger said. "We had the information down to the employee, not just with our tier-one factories, but even the component suppliers."

However, the brand's North Carolina factory has closed, creating production delays on smaller items like socks. Spotty international shipping and the restriction of the free-flowing movement of goods has also interrupted the company's supply, although not to the point where Zwillinger is worried. Of Allbirds's eight distribution centres (all of which are third-party operated), seven are still operating.

"We're trying to take a really conservative approach to what we expect from sales and make sure that we can take care of our employees, and then set appropriate expectations with customers as we learn more," Zwillinger said, referring to the company's contingency plans should more distribution centres close.

As for the ethical question of continuing to sell, requiring people to ship products from distribution centres despite global government stay-home orders, the answer isn't so obvious.

"Look, there's a balance here between the economic welfare of individuals and the economic viability of our company and the welfare of the community surrounding everywhere where we operate," Zwillinger said. "If you only take the approach where you take the least risky approach and everything is the most conservative, as a result you sacrifice individual economic welfare of people. You can create a lot of other consequences that are much worse."
The Independent Designer: Tanya Taylor
New York-based Designer Tanya Taylor sells her contemporary line at 133 stores across the US and Canada. She also has 10 digital online retail partners in addition to her own e-commerce site. But without the seemingly endless resources of a parent company, Taylor must find a way to pivot amidst supply chain disruptions and negotiate with equally-challenged retail partners.

The Tanya Taylor brand, known for its feminine, flouncy dresses bathed in colour and inclusively sized, is sold mostly at department stores, with 85 percent of sales coming from retail partners. But now that she's feeling pressure from "both sides of the supply chain," the designer said, the company's e-commerce platform is now more important than ever.

"How do we kind of pivot our e-commerce to drive loyalty and drive storytelling and not, you know, unrealistically try to push sales at this point?" Taylor said, noting that sales dropped immediately following the US coronavirus outbreak, interrupting what would have been 40 percent year-over-year growth in the brand's wholesale business and 32 percent in e-commerce. "When people are relocating or feeling anxiety around their jobs they're not going to be shopping for $500 printed dresses."

In part, the brand's digital strategy, led by director of marketing Katie Underhill and senior e-commerce manager Madeline Komen, who was just hired in February, included offering a sale featuring archival Tanya Taylor items, which the company said has influenced full-priced purchasing on the site as well. Full-price, new arrivals are already on sale - 25 percent off, mirroring the discounts the brand's wholesale partners have offered - and each purchase triggers the donation of five non-medical grade masks to various organisations in need. Colourful tops have sold well on the site, relatively speaking, equipping shoppers for their waist-up webcam interactions.

You can create a lot of other consequences that are much worse.

Sales fluctuations have kept in line with government announcements, Taylor said. For example, when the American government announced its stimulus package, sales saw an uptick. Regional sales in the brand's biggest markets - New York, Texas, and Florida - shifted as the virus hit those places. The team is relying on partner data from Google and Facebook to predict consumer purchasing behaviour and is more critical of its advertising spend than ever. It continues to send email marketing messages twice per week, though the content is less sales focused and more mood-boosting (for example, a downloadable colouring book.) Its spring digital lookbook, which the team initially budgeted $30,000 to complete, is now being produced for $2,000.

In addition to rethinking how to sell existing inventory, Tanya Taylor has had to communicate to its wholesale partners that halted production in China and now India have delayed delivery on new spring orders. The brand's e-commerce distribution partner in New Jersey, Bergen Logistics, is still operating, though they speak to those partners daily to reassess.

Ultimately, the supply chain disruption has prompted Taylor to rethink the fashion calendar altogether. "Instead of cancelling summer and spring deliveries from us, we've been able to kind of reorganize products and consolidate what we're shipping in the summer so that we're always shipping full price goods," Taylor said. "That's allowed us to kind of get out of losing a lot of money for goods we've already paid for."
The Fine Jeweller: Irene Neuwirth
When Barneys New York went bankrupt in 2019, designer Irene Neuwirth thought her business would follow. The brand, which has become a red carpet fixture favoured by stylists who dress celebrities like Jennifer Aniston and Octavia Spencer, survived thanks to a series of belt-tightening measures and new wholesale relationships with Bergdorf Goodman and Moda Operandi. But Covid-19 is challenging the luxury brand in new ways.

Luxury brands have had a fraught relationship with e-commerce, Irene Neuwirth's fine jewellery line is no exception. About a year and a half ago - the death knell of their biggest wholesale partner, Barneys, yet unrung -the brand launched its own e-commerce site, which now represents about a tenth of its business. As challenging as it was in the beginning, the timing may have saved the brand.

"It was a work in progress to learn how to sell something that's true luxury and one of a kind, how that experience sells online, but it was an incredible tool for our clients," Neuwirth said.

As the coronavirus pandemic has halted all of the brand's jewellery production, e-commerce - and a glut of inventory that was prepared for a now-cancelled trade show - has offered some salvation. Neuwirth, now at least partially in control of how her products exist digitally, doesn't intend to discount anything on the brand's site. And though her team has ramped up its digital services (by offering online chats for personal shopping and virtual styling sessions, for example), the intention is hardly to sell as it is to communicate honestly with customers.

Do people need jewellery right now? Of course not.

"I wanted to put things on Instagram that I thought were beautiful ... I wanted people to enjoy the pictures, I didn't want the pictures to be tagged with prices," Neuwirth said of her Instagram page, which accounts for the bulk of its social media marketing strategy. The brand's web team had initially tagged posts with shopping links back to the website, which typically drives a considerable amount of web traffic and e-commerce sales, but Neuwirth vetoed the move.

"It just felt like a mixed message, you know? Do people need jewellery right now? Of course not, nobody needs jewellery," she said. "Does anybody want to enjoy a beautiful picture? Tons of people like to do that."

That earnest approach also applies to how Neuwirth is communicating with retail partners. In jewellery, brands ship their inventory to their wholesale partners either on consignment, meaning items are lent to a wholesale partner for a set duration of time, or through purchase orders. After the Barneys bankruptcy, which left Neuwirth's items liquidated rather than sold or sent back to the brand, she determined they would come up with their own consignment-like strategy to protect against future retail downturns. As such, she's been able to negotiate clear-but-fair terms with her digital retail partners, offering extended terms for products to appear online.

"I'm very controlling with stores in what I'll allow them to have, not because I don't want them to have beautiful things, but I just don't want anyone to have an abundance of inventory that they're stuck with in a time where things get crazy," Neuwirth said. Luckily, jewellery is also less sensitive to trends and seasonality than clothing items, a boon for brands like Neuwirth's.
The Luxury Label: The Elder Statesman
founded The Elder Statesman in 2007, just as the Great Recession was taking hold on the global economy. A little over a decade later, he's facing another crisis. The Los Angeles-based lifestyle brand - best known for its cashmere sweaters and throws, with its own store in West Hollywood and retail partners all over the world - has leaned into its foundations to produce and distribute goods from Chait's home.

Towards the latter half of 2019, Greg Chait and his team at The Elder Statesman began putting to action their plan for the brand's e-commerce site. The website launched in early March, though there was no time to mark the occasion, as the worldwide coronavirus pandemic disrupted not only retail operations, but their personal lives. As California mandated social distancing practices, Chait found himself at home in Venice, "running the company from top to bottom from a landline and a computer," relying on know-how from the brand's early days to make its signature hand-dyed cashmere crewnecks and blankets.

Nothing's off the table.

Chait said he is prepared to ride the pandemic out from his home without delaying existing or future orders. The brand, which sources some of its wool materials from hard-hit countries like Italy, has stockpiled enough excess over its 13 years to continue producing locally. "Many vendors we work with are shut at the moment, but since we are vertical and spread out we can make it work for us," Chait said. "Within that inventory is lots of opportunity to make product we love."

While The Elder Statesman is new to e-commerce and operates just one retail store, it's been doing direct sales since the beginning through its private-order business, which has become especially important in this unprecedented time. "Obviously the world is tricky right now, but we are still interacting closely with our amazing client base," Chait said. While the newly launched e-commerce site makes selling to a broader swath of customers easier, the brand encourages followers on its Instagram page to directly message them for "virtual shopping."

The Elder Statesman is still trying to figure out how to shoot product without violating social distancing rules and how much to spend on digital marketing. (For now, the idea is to work with "friends of the brand," rather than traditional influencers.) When it comes to discounting, which many of Chait's retail partners have already started doing, he's eager to hold off as he doesn't want to condition customers to expect it. "Nothing's off the table," he said. "But we're not going to do anything that hurts our brand."
Additional reporting by Sarah Kent. Related Articles: The Dos and Don'ts of Marketing During a Pandemic Is This the End of Wholesale, or the Beginning of Something Better?

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How 5 Very Different Brands Are Managing E-Commerce Right Now

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NEW YORK, United States - When it comes to e-commerce, fashion has been slow on the uptick. And yet, the channel has never been so important. The coronavirus pandemic - which has cost thousands of lives and yet-uncalculated damage to the world economy - has cut off cash flow from physical retail.

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The odds are against the future of department stores. They are overstored, slow to change and underwhelming in service.

Selling to price- and product-knowledge-conscious consumers is a challenge, with no visible pullback by those who choose to shop online. All of this is compounded by the fact that this old and venerable segment of retail has been losing the hearts and minds of its customers for years. It is a fair question to ask: Can department stores survive?

Hudson's Bay Co.'s recent move to sell its Lord & Taylor brand and inventory may be just one of those decisions that is in the right direction.

Historically, department stores held the upper hand in the retail sector. If you sat in on trade shows, it used to be that everyone wanted to hear what they were up to. That's no longer the case. Most attempts to resurrect them have had no effect, compared with their past campaigns of flair and flawless operational execution. Refreshing store designs has a limited shelf life and it doesn't always drive sales. It is likely that the golden days of department stores ended around the 1980s.

During that decade, department stores went through major transitions, store expansions and a response to a threat from a disruptive innovator called Walmart, which was also on a path of accelerated growth. So aggressive and absolute was its impact that it was referred to as the "Walmart effect."

It didn't take long before department stores noticed consumer trends shifting to value-conscious shopping. To compete, they responded by reducing costs to deliver value. In some cases, the value message was pushed too far, changing a brand's position, such as with Sears.

Walmart was a North American phenomenon and it marked the beginning of significant competitive behaviours; it also fuelled the failure and consolidation of other retail chains. Even central business districts could quantify the impact of a Walmart opening on the outskirts of town and the financial shock to local businesses. They called for the banning of Walmart, much as retailers react today to the "Amazon effect."

For decades, shopping has been romanticized as an experience where consumers can relax and enjoy the goods that retailers have brought in and escape from the everyday routines of life. Now, however, consumers are focused on balancing work, family and their household ecosystems more than ever.

Retailers can blame Amazon or technology all they want for the shift in shopping behaviours. Most didn't focus enough on the time-starved consumer who was looking for simplicity and convenience. Technology used to be a resource that many retailers used to improve productivity, buying, data collecting, financial reporting and to identify trends. In this past decade, those advantages have been destabilized. Technology has advanced the capabilities of retailers; however, it has also become a competitor in itself.

It is estimated that Amazon, Walmart and eight other retailers own almost 70 per cent of online retail revenue in the United States, that leaves 30 per cent for everyone else, according to eMarketer. The biggest obstacle for department stores is the cost of exiting their old business and consumer models and the time it will take to build their digital transformations and make them pay off. These retailers may be too big to be nimble and transition their business models effectively. And the question is, what will future transformation look like?

In fairness, there are many consultants who will tell you that "customer experience" is the salvation for all retailers. There may be a great deal of truth in that, however, it isn't enough to just say "today we are going to be friendlier and service-oriented with the public." As with every initiative, there has to be both an investment in training and development, in addition to the continuous evolution or revolution of service and the brand.

To be equally on par with online shopping, retailers have to have fast transactional processes, and be able to fill customer requests quickly online. Department stores know this, and the risks are high because buying too much inventory of some items and not enough of others is often the difference between paying for payroll from profits versus a line of credit.

Department stores have been built around business and consumer models with physical shoppers, today they are virtual shoppers. Repositioning department stores will take a great deal of patience, work, risk and vision. It will be about making tough calls on real estate. Department stores must understand the future of consumerism and e-commerce, and define how their brand will fit into that future. There also needs to be a major shift of intellectual resources from the home office to the front lines. Department stores are too centralized and they must become leaner to be nimbler.

The sale of Lord and Taylor looks like the right move by Hudson's Bay. It will become leaner on top, get rid of underperforming assets and put a lot more intellectual capital back on the front lines. It may just stay in the game for the long term.

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Opinion: The not so promising future of department stores

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The odds are against the future of department stores. They are overstored, slow to change and underwhelming in service. Selling to price- and product-knowledge-conscious consumers is a challenge, with no visible pullback by those who choose to shop online.

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Tweet

Looking to stay ahead in the increasingly competitive business world? Building a solid customer experience will be critical.

While product differentiation and marketing strategies are important, companies that focus on customer experience are poised to win in the long run. After all, multiple surveys show that customers are looking for much more than the product when deciding which brands to engage with.

Below are 10 emerging customer experience trends that businesses should focus on in 2020.

1. AI For Customer Service

A survey indicates that 67 percent of consumers would switch from a brand with poor customer service to its competitors.

Today's consumers are looking for proactive brands that are responsive to their needs. Companies need to satisfy the desire of customers to get instant feedback. Businesses will have to turn to artificial intelligence (AI) technology to improve customer service by offering personalized real-time feedback.

AI takes digital customer experience to the next level by enabling brands to be available to their prospects at every stage of the buying process. For instance, AI chatbots can help to uncover a user's intent through a series of questions tagged with specific trigger words. The user's conversation can then be passed to the relevant department, based on the trigger words detected, for further action.

2. Omnichannel Marketing

Companies should focus on omnichannel delivery to provide customers a uniform experience across various touch points. For example, customers may start interacting with your brand on Twitter and continue the conversation elsewhere. Their experience on both of these platforms should be seamless.

Enabling uniform customer experience across multiple marketing channels helps to build brand consistency and loyalty. Brands should implement a digital customer experience strategy across multiple channels where their prospects hang out.

3. Use of Predictive Analysis

Predictive analytics uses historical data, statistical algorithms, and machine learning to predict future consumer behavior. In 2020, more brands will continue investing in predictive analytics in their quest to deliver more personalized experiences.

Brands will be banking on predictive analytics to determine consumer responses, improve operations, and manage resources.

4. Hyper-Personalization for Online Consumers

According to Internet Retailing, 69% of consumers expect a personalized experience from brands. However, only 40% of brands actually deliver personalized experiences.

Consumers expect personalized communication through whichever media a company uses to reach them, be it a newsletter, email, SMS, and more. In 2020, hyper-personalization will be key to the bottom line of most companies.

Companies can use call analytics software to uncover the path that customers take when interacting with them. Using call tracking software, brands can also determine where their prospects originate from, which platforms they prefer, the average interaction period, and other data that can be used to improve conversions.

5. Increased Focus on Employee Experience

Various studies show that employee experience and overall customer satisfaction are directly related. For example, this study indicates that companies with more engaged employees perform better nearly 1.5 times than their competitors.

Brands looking to improve in all spheres of their operations will need to focus on employee satisfaction in 2020. Deploying intranets and extranets, providing incentives, and surveying employee satisfaction are some of the things that can help boost productivity.

6. Online Staff Training and Collaboration

More firms will be turning to online training portals to streamline staff training. The online collaboration will be adopted to ensure staff can learn on their own, which is important for operational continuity.

Collaboration tools will become more integral in staff communication in 2020. Brands will leverage various technologies that enable collaboration to ensure their staff has the latest training material on demand.

7. Robust Online Security Measures

To offer personalized experiences, brands will need to gather more data about their consumers. This data will have to be managed and stored in line with industry regulations, such as PCI DSS (Payment Card Industry Data Security Standard).

More companies will be adopting cloud technologies for secure data management. Also, the use of biometric technology, such as facial recognition, fingerprint ID, and voice biometrics, will rise in 2020.

8. Augmented Reality Marketing

Augmented Reality (AR) enables users to interact with virtual content in a real-world setting. For example, shoppers in a retail store can see how different outfits would look on them without actually putting the clothes on.

With 5G technology being rolled out, more companies will be looking to take advantage of Augmented Reality to improve customer experience.

9. Consumers Will Demand Transparency

In the digital age, honesty is the new currency. Research from Sprout Social indicates that 86% of consumers prefer brands that are honest. Firms can use social media platforms to foster good relationships with their prospects and customers.

Consumers care more about their interaction with brands and use various platforms to reach out to them. Brands will have to be proactive in engaging their audiences in their voice to cultivate trust.

10. Chat Bot Marketing Will Increase

Thanks to advances in AI technology, chatbots are no longer the robotic avatars seen on websites five years ago. Today, chatbots can hold engaging conversations with consumers, helping to solve their problems, when no human agent is available.

Businesses can use chatbots to reduce their support workload. The bots can be configured to handle general inquiries and pass specific information to designated departments or employees for further action.

The use of chatbots helps companies to handle more customer queries without increasing their overheads. Moreover, brand employees save time on customer support issues to handle more complex tasks.

Successful online customer experience management is critical in industries where there is little in terms of product differentiation. The new decade is, without a doubt, going to be an interesting period for customer experience. The rise of AI and rollout of 5G provide new opportunities for delivering personalized customer experience.

The brands can implement these customer experience trends in 2020 to stay competitive in their spaces.

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Top 10 Digital Customer Experience Trends to Look Out For in 2020

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Tweet Looking to stay ahead in the increasingly competitive business world? Building a solid customer experience will be critical. While product differentiation and marketing strategies are important, companies that focus on customer experience are poised to win in the long run.

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The U.K. retail world is having much the same difficulties that American retail has had, suffering one of its worst years on record in 2019. But when it comes to luxury department stores, the U.K. is actually coming out ahead.

In 2019, Selfridges posted a record year with a 6% increase in sales, while Harrods has completed its 10th consecutive year of positive growth. Harvey Nichols saw a record 9% increase in profits in 2018. At a time when American department stores are closing, downsizing or outright going bankrupt, their U.K. counterparts are prospering.

Part of that success boils down to the way these department stores have negotiated luxury's relationship with mass fashion. Harrods, for example, has shunned any relationship with mass fashion. After being purchased by Qatar's sovereign wealth fund for $2 billion in 2010, Harrods has focused exclusively on its wealthiest customers, aside from a few more affordable souvenir products for tourists, according to Harrods' managing director, Michael Ward.

Ward said that diluting the exclusivity of brands has been the downfall of many American department stores.

"I've mentored people from brands that have gone to American department stores and been asked for a ton of inventory to sell in many locations," Ward said. "That destroys the brand if you're new. It won't sell through, and the brand will be crushed. That's why American department stores have lost. Even when they've modernized, it's just too much stuff, and it's lost some of its exclusivity."

U.S. department often carry a mix of luxury brands and mass brands. Bloomingdale's carries brands like Gucci and Saint Laurent alongside Uggs and Toms, while Neiman Marcus carries Cole Haan and Club Monaco.

Meanwhile, competitor Selfridges is not as averse to courting the more casual and everyday styles that have become popular, particularly the valuable streetwear category. Most recently, the retailer partnered with streetwear publisher and burgeoning e-commerce player Highsnobiety to open a new, temporary space within its store called The Co.Lab. The temporary space will run until February at Selfridges Corner Shop - a separate location focused on accessories - and features a host of popular brands like a collaboration between Alyx and Moncler, a capsule collection from Prada, and a collaboration between Highsnobiety and Maison Margiela.

It's one of several recent streetwear-focused initiatives Selfridges has employed recently like the launch of a dedicated streetwear room and accompanying skateboarding area. Selfridges has attributed some of its recent success to the growth of streetwear, which was estimated to be worth around $185 billion in sales by research firm Strategy&.

"The partnership with Selfridges allowed us to extend our brand into the real world, and offer another touchpoint and service to our audience," said Highsnobiety CEO David Fischer. "Selfridges gave us a fantastic space with their Corner Shop, and it allowed us to bring our weekly drop concept into the real world."

But the U.K. does have its share of retail problems. Stitch Fix identified a few as the reason it saw an opportunity for expansion in the U.K. last year.

"From research, we know that pain points for U.K. shoppers are very consistent with those of U.S. consumers," said Simon Leesley, managing director of Stitch Fix U.K. in an interview with Glossy in May. "They are overwhelmed by choice and time starved, yet still want to look fashionable and feel great."

But much of the U.K.'s retail problems have affected high-street or fast-fashion outlets, like Topshop and Forever 21, which both closed large numbers of stores last year, leaving high-end department stores relatively unscathed.

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Why UK luxury department stores are outperforming their US counterparts - Glossy

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While the U.K. retail world is having much the same difficulties that American retail has had -- suffering one of its worst years on record in 2019 -- but when it comes to luxury department stores, the U.K. is actually coming out ahead.

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For anyone who is doing multi-brand concept store, here is an interesting article. 

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For anyone who is doing multi-brand concept store, here is an interesting article. 

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https://www.voguebusiness.com/consumers/can-10-corso-como-concept-stores-survive-the-pandemic

"While there are opportunities for multi-brand specialty stores once the virus passes, factors like location and proper partners are key to survival." Perhaps the "multi-brand specialty stores" which will suffer the least will be the ones who were online-only e.g. Asos and Farfetch as opposed to Selfridges and Harvey Nichols which were both online and in store. Department stores which have not shifted towards online shopping will be hit the worst. Perhaps, this post-virus scenario will lead to many of today's most renowned multi brand stores to join forces and partner with each other instead of buying each other off (which is what was happening before the start of this pandemic).

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The future of retail: What 2020 and beyond will bring to the industry

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The future of retail: What 2020 and beyond will bring to the industry

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RETAIL DIVE: For the past decade, legacy retailers for the most part seem to have finally embraced online and even all-channel commerce. In the next decade, how much more evolution do you foresee? What, if anything, is holding e-commerce back?

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Doug Stephens' expertise is grounded in the past: Behind him are two decades of executive experience and two books, "The Retail Revival: Re-Imagining Business for the New Age of Consumerism" and "Reengineering Retail: The Future of Selling in a Post-Digital World."

He calls himself (and his consulting business) "the Retail Prophet," however, in light of his focus on the future.

As we round the corner of the 21st century's second decade, a time of reckoning for retail, we asked for his view of the industry as the next 10 years unfold.
The following discussion was conducted between Stephens and Retail Dive Senior Reporter Daphne Howland over email, and has been edited for length and clarity.
RETAIL DIVE: For the past decade, legacy retailers for the most part seem to have finally embraced online and even all-channel commerce. In the next decade, how much more evolution do you foresee? What, if anything, is holding e-commerce back?

DOUG STEPHENS: Where we find ourselves today is at the end of the beginning of e-commerce. In 2019 a little more than $3 trillion dollars in global retail was transacted online and was largely comprised of the sorts of products that are relatively simple to transact - electronics, airline and event tickets, shoes, and a range of other commodity items. However, the outstanding opportunity is $27 trillion remaining in the global retail economy, including things that are fundamentally more complex purchases.

What items that we think of as resistant to e-commerce do you see shoppers increasingly buying online?

STEPHENS: I project that by as early as 2033 the majority of our daily consumption will be transacted online. We also sit on the cusp today of what I call the Replenishment Economy.

But things such as automobiles, jewelry, real estate, perishable food items, pharmaceuticals, home furnishings, luxury items and home improvement products - these and other complex product categories represent the next frontier of online commerce, and companies like Alibaba, Amazon, JD.com and others will be aggressively working to unlock revenue in each.

To do this they'll be exploring a range of new platforms, systems, shipping capabilities and technologies to dramatically improve consumer confidence in buying these categories online. The whole concept of how we shop online will also change dramatically.

The future of retail will see complete integration of technologies like augmented and virtual reality, the internet of things, sensor-driven packaging and connected appliances. This will result in an exponential impact on e-commerce volumes.

Meanwhile, though, doesn't brick and mortar remain fundamental to retail, even if it often also seems behind?

STEPHENS: In the future, all but the most convenience-based retailers will begin to use their stores as media to acquire customers and their media platforms as stores to transact sales.

Put another way, media is now a cost of sales and rent is now a cost of customer acquisition. Retailers that miss or ignore this shift will do so at their peril.

What mistakes are retailers making with their stores, and how do you see physical stores evolving?

STEPHENS: Here's what we sometimes forget. If you stand on any metropolitan street corner in North America, 99% of the retail you will see around you was built to succeed in the 20th century. Sadly, this means it's built to fail in the 21st century. To understand why, one has to appreciate that the old model for retail relied almost exclusively on paid media and advertising to drive consumers down the purchase funnel to physical stores to purchase goods.

This is no longer the case. Increasingly, media, in all forms, is becoming the "store." The fact is that 66% of the time, when it occurs to an American consumer that they need a product, they're going directly to Amazon to search for it. Not a mall, shopping center or store, but Amazon. In essence, media (in a variety of forms) is becoming the store. Online merchants can display more products, provide more accurate and robust product information, and transact seamlessly in one click. Media is not merely becoming the store, it's becoming the ultimate store.

Conversely, however, physical stores are going through a very different but corresponding evolution. Brick-and-mortar stores are no longer simply a channel for the distribution of products. They no longer act as the final point in the purchase funnel.

So stores won't disappear, but how important will they be?

STEPHENS: Physical stores are becoming a powerful media channel, and very often the first point of contact between brands and consumers. As consumers become increasingly technologically entrenched, they'll crave far more and better physical retail experiences. And so brick-and-mortar spaces will offer retailers and brands the opportunity to draw the consumer into the brand story, deliver a remarkable and immersive brand and product experience, and ultimately galvanize their relationship with consumers. A relationship that can then live across multiple buying channels.

Physical stores will not only be a powerful media channel, but also the most manageable and measurable media channel in financial terms.

In the next decade, what are the forces retailers must contend with in order to succeed?

STEPHENS: There are a wide variety of challenges facing retailers. The polarization of wealth and incomes will continue to gut the middle class in most developed economies. Baby boomers will continue to spend less, thus requiring brands to figure out the needs and sensibilities of younger consumers. Technology continues to advance at unparalleled speed. Globalization is shrinking the world and bringing a never-ending procession of challenger-brands to the market.

But all of these challenges are surmountable, provided a company has the right leadership. Hence, the most important challenge and opportunity into the future is establishing effective leadership itself.

What does "effective leadership" entail?

STEPHENS: The leader of the future must do several things.

They must condition boards and investors to accept an atmosphere of constant experimentation, iteration and change. They must instill curiosity in their teams and a willingness to think laterally and divergently about possibilities, as opposed to the linear and convergent thinking most employ today. The leader of the future has to constantly be pushing the organization out of its safe space and challenging the status quo. They must be willing to step just beyond their current understanding and do unprecedented things, often with little to no supporting data. They must be calculated risk-takers with a knack for building talented teams.

And finally, they need to constantly be trying to develop concepts that put their current concept out of business. That sounds counterintuitive to a lot of leaders, but it's vital. You have a choice to either create the thing that kills your current business or wait for someone else to do it. It's a lot better to own the disruption.

You mention the decline of the middle class. What has that meant for the last decade, and what does it mean for the next?

STEPHENS: Our entire Western, post-WWII frame of reference in retail is built on the concept of a robust, enduring and growing middle class that aspired to the mid-tier trappings of success. Most pricing systems were bell-curved on the basis of "good, better, best," knowing that most consumers would choose "better." And until the early 1980's that was the case.

Over the last 40 years, however, we've seen the middle class steadily gutted, by virtue of polarized education levels, incomes and wealth. We've seen labor unions weakened and blue collar work relegated offshore or, more often, to technology. The result is that our middle class democracies have become societies of haves and have-nots.

The problem is that many retailers like Sears, J.C. Penney, Kohl's and others who traditionally catered to the middle class continue to do so, despite the fact that their customers are disappearing. Retailers have to choose which of these societal segments they're serving. There is no "good, better, best" anymore. You're either "good enough" or you are the best. The bottom line is, if you're a mid-tier retailer selling mediocre products at average prices with an okay customer experience, you may as well close up shop now.

Some see this decline as a failure of policy or government responsibility. Do you think retailers have any obligation to get politically involved to revive the middle class?

STEPHENS: I think the onus is more on consumers to get involved. After all, it's been the consumer's lust for cheap products that has given rise to Walmart and other big box deep discounters, pushed retailers to stagnate retail wages and inspired the fast-fashion movement, as well as online predators like Amazon. As much as I'd like to believe that retailers will altruistically save the middle class, consumer action and political involvement will ultimately be the catalyst.

In light of that reality, do you think consumers are becoming less materialistic or is it more that they can't afford as much?

STEPHENS: There's no question that consumers are moving more of their spending to experiences over products. According to one study, more than three quarters of millennials surveyed indicated they'd prefer to spend money on experiences with friends and family as opposed to products. We've seen sharp increases in spending on categories like entertainment, live concerts, restaurant and travel. Hence, plays by retailers like LVMH, which is getting deeper into the hospitality sector through its Belmond acquisition.

What's driving that desire for experience? And what are the implications for retailers, which, after all, sell things?

STEPHENS: Part of what's driving that trend is social media. Experiences have become the social currency of a new generation of consumers who have commemorated every meaningful life experience online. Experiences, not products, play best on social. I'd argue that increasingly, experiences really are the product itself. The actual product is almost a souvenir.

There is also the new financial reality. While millennial incomes have finally come up to speed with previous generations, their wealth and net assets continue to trail. Many continue to shoulder significant student debt and the cost of home ownership is out of reach for many.

This has created a triple-whammy for retailers. Today they have to serve infinitely more discerning and informed consumers, pressed by lower net wealth and higher debt, who also have a bias toward experiential spending. For any retailer calibrated to serving baby boomers for the last 30 years, it means a complete overhaul of the business and a rethinking of their customer experience.

With such complexities, what will it take for a retailer to understand its customer?

STEPHENS: When most retail businesses are founded, the owner usually has an intimate knowledge of their customers because they spend much of their time interacting with them. In some cases, the owner themselves is a consumer of the product and so innately understands the needs and preferences of their customers from personal experience. As organizations scale, this intuitive understanding dissipates, and leadership loses touch with the needs of the customer.

That's when power and decision-making move away from the front lines of the business toward the middle of the organization. And instead of speaking to customers directly, companies hire research firms and conduct studies and focus groups - none of which can replace the intimacy and immediacy that the company has lost with its customer base. Instead of emanating from the front-line, strategy begins to roll downhill, often disconnected from the customer reality. And eventually the dissonance between the company, its employees and its customers becomes fatal.

So the challenge for organizations is to push power, autonomy and decision-making back to the front lines and to let information from the front lines inform the broader strategy. In order to accomplish this, the structure of the company and its compensation programs have to promote such a dynamic.

So is "knowing your customer" a universal, age-old phenomenon? Or is this, too, evolving? Put another way - what remains the same about, say, a mid-20th century department store customer and the customer of today and of the future?

STEPHENS: In general, we need to focus a lot less on the nuanced differences in needs between individual consumer segments or demographic cohorts. We've become obsessed with segmenting consumers into "personas" or "archetypes," each with sometimes diametrically different needs.

Brands and retailers would be wiser to build their value proposition to address deeper, more universal human needs. The need for security, recognition, belonging, entertainment, inspiration, purpose and respect etc. - these are things every human wants and needs. If more retailers focused on mastering these broad human needs, as opposed to buying into demographic and psychographic profiling, we'd have a much lower failure rate in retail.

Technology has both challenged and enabled retailers in the past decade. What technology on the horizon do you believe will be important for the retail industry to understand or embrace?

STEPHENS: First, my response as a business advisor is, it depends! The most important technology on the horizon depends subjectively on a company's market positioning, brand essence and customer experience. I always recommend that a brand work backward from their customer experience design to choices about technology.

For example, for Walmart robotics to replace human workers may be critical as a means of reducing operating costs and maintaining low prices. For Nordstrom, however, the most important technology may be artificial intelligence (AI) to enable sales associates with more effective service tools and information, all in an effort to justify higher prices.

Now my unfiltered response: I believe that AI will be the most profound technology of the next century in retail. It will fundamentally change every aspect of both the back and front end of retail. Everything from manufacturing processes, shipping, logistics, inventory management, staffing, training and customer experience will be directly and dramatically reshaped by virtue of AI. Consumers, too, will begin to operate with increasing help from AI-enabled systems, platforms and apps. Just as we rely on technology like GPS to navigate from point A to B, we'll use AI technologies to similarly navigate our consumer lives.

Finally, let's also step beyond that. What must retailers understand about the future regardless of the latest tech?

STEPHENS: There are only two strategic choices available to retailers who wish to survive the coming decade. Either sell something no one else sells (which is increasingly difficult in a globalized economy) or sell what you sell in a way no one else does. This means breaking the script in your category, devising new and compelling experiences and reinventing how people buy what you sell.

In essence, the unique selling process you create becomes as much of a product as the product itself.

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The future of retail: What 2020 and beyond will bring to the industry

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Doug Stephens' expertise is grounded in the past: Behind him are two decades of executive experience and two books, "The Retail Revival: Re-Imagining Business for the New Age of Consumerism" and "Reengineering Retail: The Future of Selling in a Post-Digital World."

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The retail industry has been in a constant stage of evolution, especially as technology offers more ways to improve the in-store experience. Store owners may be wondering how to compete with online shopping in this fast-paced climate. Compared to what was available in the retail industry 50 years ago, today's consumer has their choice of shopping destinations, forcing stores to really focus their efforts to attract and retain customers.

Even consumer product categories like household goods, food, and home decor are popular online, making the spaces more competitive than ever. How many consumers are still shopping in the store? The data is surprising. While the news may be full of retail chain closures, the data for consumers' shopping reveals that they still like the convenience and in-store experience of brick and mortar.

Data Shows Consumers Aren't Neglecting Stores

The data is clear and shows in-store retail sales on the upswing. Based on current reports, retail should continue this trend through 2018.

The National Retail Federation (NRF) published the Winter 2017/2018 Quarter Review with a look at how today's consumers are shopping, and the numbers show brick and mortar retail is still the primary destination for most shoppers. Of the shoppers surveyed, only 21% identified themselves as primarily online shoppers, meaning they bought more than half of their purchases online; the remaining 79% said they bought half or less of the items they needed online.

NRF's data isn't an anomaly though, as other consumer spending surveys show the same trend. When PwC Global first surveyed consumers for their Global Consumer Insights Survey in 2010, they found people were making fewer weekly purchases in physical stores, a rate of only 36 percent. The trend continued in 2014 until 2015, when the rate of in-store shopping rose to 40 percent in 2015, and 44 percent in 2018. At the same time, the survey showed purchases by computer dropped from 27% to 20% over the last 6 years.

Breaking down the data spells good news for retailers. It shows that consumers will still want to shop in-store, even when given the option to purchase an item online.

Consumer Viewpoint Shift Toward In-Store Experience

Why are consumers still flocking to stores, especially in this age of omnichannel shopping? The answer appears to be the in-store experience. Not only do consumers prefer the sensory experience of actually touching an item, but they also cite convenience as a reason to visit a store. We're in an age of instant gratification, and consumers want to be able to purchase an item and get it on the same day.

Consider the other reasons why consumers prefer the in-store experience, as found in Mood Media's The State of Brick & Mortar :

72% of Americans mentioned the ability to touch, feel and try products as a top reason to shop in-store

48% listed the ability to browse and discover new things as a top reason to shop brick & mortar

26% chose stores over online shopping for the ability to speak to a sales associate

1 in 5 global customers in the survey preferred to shop in an enjoyable atmosphere over shopping online

However, the surveys also revealed things that customers didn't like, and these are touchpoints where stores could look to improve:

60% of consumers listed waiting in line as a frustration

47% said having an item out of stock

43% said stores having an atmosphere that was hectic or too busy

33% mentioned having staff members unable to assist them with their purchase needs

How Retail Stores Can Improve the In-Store Experience

How can retail stores attract consumers and boost retail sales overall? First, retailers need to remember to focus on the in-store experience; the goal is to make it a memorable event while providing the items they need.

One example to consider is Target, which despite closing its Target Canada locations, has made significant improvements in its United States footprint. The retailer has expanded its physical presence by opening small-format stores with more on the horizon - stores geared toward delivering what customers need and want by analyzing local demand. In addition to the new stores, Target has also remodeled over 100 locations, adding new lighting, changing displays, and making the store more attractive for consumers to visit.

Shopping is a sensory experience where customers want to touch and see the products they're buying. Retailers should remember this and make changes to their stores accordingly while even considering a third sense: aural. For instance, 42% of the shoppers surveyed by Mood Media said that they enjoyed when stores played music and 84% of Americans said they felt a store was "more enjoyable" when the retailer played music.

Second, look at the operational level. There's nothing customers like less than being unable to find what they need. Are sales associates well-trained to answer questions about a particular product? Do they know where certain items are and how to stock them properly? Consumers in search of information or help won't wait around. They'll visit another store for their needs, or go online to shop. Is there a way to speed up checkout, especially for consumers who have a smaller purchase?

So how can retailers meet the needs of consumers like those surveyed? It all comes down to this: Know what your customers want, and deliver. The data shows that customers still prefer brick and mortar, and that number is increasing. If your same-store sales are decreasing, take a look at how your operations team handles the in-store experience. Maybe the answer lies in the details you're overlooking.

Learn how CB4 helps Barnes & Noble use their basic, raw POS data to generate actionable insights for store managers to drive sales.

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Why Do Retail Customers Prefer an In-Store Experience? - CB4

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The retail industry has been in a constant stage of evolution, especially as technology offers more ways to improve the in-store experience. Store owners may be wondering how to compete with online shopping in this fast-paced climate.

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It is not uncommon to see retail stores that are so out-of-date they look like backdrops to old films, but generally retailers have always been passionately interested in finding out what will be the next best thing in shopping.

They visit one another's stores and copy what they like most. A hundred years ago, visiting a department store was the most thrilling thing ever, such a range of goods, displayed to perfection in what seemed like palaces of commerce.

The 'Next Best thing'

In the last 50 years the next best thing of course has changed a great deal. It has included the shift to self-service with the new Supermarket (and later the Hypermarket or Superstore) seen as the essence of the Future-Store. Self-service and self-selection is the norm these days in virtually every store. Eliminating slow checkouts and lengthy queues, a typical bugbear of most shoppers, has involved better layout, EPoS (electronic point-of-sale and laser scanning), automatic card readers, customer self-scanning machines and contactless payments. EPoS has provided customers with an itemised receipt and retailers with accurate information about stock and detailed information about who buys what and what time of day.

The Future-store versus Online

I used to think that the Future-store was all about technology, but that is wrong. Probably. Obviously the most important type of Future-store at present is online retailing. Initially a method of buying books and music in the early 1990s, which has moved the retail store from the mall or high street into the customer's own front room. Most medium and large retailers now have their own ecommerce operation and one of the main Future-store questions for them is how to balance their ecommerce operations and IT with the way their physical stores operate. They must ensure the same customer is treated in the same way by each part of the business. This approach, termed omni-channel, is an aspiration today rather than an approach that any retailer is yet using, but it certainly will be the data bedrock of the retail Future-store.

Many Large Stores Now Obsolescent

Retailing has certainly not stood still in the last 50 years. Stores have got bigger and bigger: in 1965 the UK definition of a supermarket was a 3,000+ square feet store with self-service. This would now be regarded as a tiny convenience store. The problem that many multiples now have is that their stores are too large. Some of the merchandise that used to help fill the sales area, such as music, videos, CDs, small electrical goods, homeware, kitchenware goods, clothing and babyware, are now bought from discounters or online. Hence the approach to remodel stores, making them smaller, to add services such as dry cleaning, clothing repair, cafes, and gaming studios, to invite competitors to open concessions, or to partition the stores to make three stores where there was once one.

New Technology

New technology probably will be an important element of the Store of the Future. Some people think that the Future-store is only about using new technologies, although our view is that this is mistaken. If physical stores are to survive they need to add something different to the shopper's experience - something they cannot get online, but if the new stores are too slow, inefficient or too expensive they probably won't be the Store of the Future for very long. Moreover, technology-intensive stores will have much higher costs than other stores and this probably means they will be confined to major shopping destinations. However it is true that technology costs normally fall with mass production so that a product like a virtual 3D mirror (which shows you what the garment looks like from every direction and can even change the garment's colour without the customer needing to put a fresh garment on physically) may potentially become very common.

New Technology is Limited by People

However people don't necessarily embrace technology warmly. Customer self-scanning is still seen as problematic five years after the major push to get shoppers to use them. The reasons are probably partly technical (they are very clunky and slow to use) and partly psychological (they are not private enough). Even Amazon Go stores, which have received tremendous favourable publicity a year ago, have a limited range of goods and the average customer spend is currently very low, suggesting that technology alone is not the answer.

Some New Ideas about the Store of the Future

Below is a list of videos with some new ideas. Some ideas are terrible (facial recognition), some practical (refills or subscription services) and others involve high tech that is worth considering ( shop and Go and automatic RFID-based no-wait scanning). Several are made by companies to help sell their products, but they are still very interesting. We have not been paid to recommend any of these videos. As you might expect, there is some repetition. There is no need to watch every single one.

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It is not uncommon to see retail stores that are so out-of-date they look like backdrops to old films, but generally retailers have always been passionately interested in finding out what will be the next best thing in shopping. They visit one another's stores and copy what they like most.

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Luxury brands and retailers have been transforming stores into home-like spaces to build deeper connections with customers. Now fast-fashion is following suit.

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LONDON, United Kingdom - Tucked away on Lexington Street in London's Soho district is a bright ground-floor space, minimalist in design, yet sophisticated in taste. A set of Pierre Jeanneret "Clerk" chairs stand beside a Yves Klein table artfully covered with vintage copies of World of Interiors magazine, while there are hanging mobiles by artist Manuel Marín and Picasso plates. The same Klein table displays velvet gold tassel mules by up-and-coming label Sanayi 313, while rails are sparsely filled with designs pieces by Isa Arfen and Issey Miyake's pleated dresses. You'd be forgiven for mistaking this as a cool friend's enviable apartment. In fact, this is Studio, where everything is for sale.

"The idea was that it was like shopping from my apartment," says Eagle of the store, whose downstairs space often hosts designer and book launches, brand events and art shows. "We want it to feel like a space that's used. The last thing we want is for it to feel sterile." Eagle is also creative director of The Store - an on-site shop at SoHo Farmhouse in Berlin and Oxfordshire, as well as at 180 Strand - which was explicitly designed not to look or feel like a store, but instead, act as a creative hub for like-minded creatives by offering a social space and sometimes partnering with art galleries. "People come, plug in their laptop and stay all day. At the end, they might go and buy a coat or a jumper from The Row."

Alex Eagle Studio is just one of several apartment-style boutiques that have opened their doors in the past two years. Moda Operandi, Sézane, Kitri and Peter Pilotto are just a few of the brands and retailers that have been presenting their stores (or in some cases pop-ups) as carefully curated homes. "The trend for residential-style stores began at the end of 2015 when brick-and-mortar stores began to raise their experiential game," says Laura Saunter, retail editor of WGSN Insights, a trend forecasting firm.

"It's about understanding things in context, and in domestic settings," adds Katie Baron, head of retail at Stylus, an innovation research company. "While a few years ago it used to be about establishing an identity that you can roll out to numerous places, the point of apartment stores is a sense of localisation and curation," she continues. "The key [to a successful retail store] is immersion, intimacy and a sense of brands needing to [offer] a whole lifestyle."

Marin Hopper opened her flagship store in a turn-of-the-century Upper East Side townhouse in 2015, where she not only sells her widely-admired Hayward bags and unisex line Hopper, but also lives with her family. Drawing on her Hollywood heritage - she is the daughter of late actor and director Dennis Hopper and actress Brooke Hayward - the space features floor-to-ceiling woodwork, plush sofas and bookshelves, designed for customers to interact with merchandise at a slower, more tranquil pace. She also collaborates regularly with artists and writers.

"It's a very old-school philosophy," says Hopper. "As much as we all like to go on the internet, we all still want to go someplace that inspires us. The storytelling is a big part of customers wanting something."

The key is immersion, intimacy and a sense of brands needing to offer a whole lifestyle.

To be sure, these kinds of spaces are not just about selling. "It's an effective way for brands to sell that inspirational lifestyle and incite that emotional connection, which will, in turn, get loyalty," says David Roberts, senior project manager at visual merchandising firm Prop Studios, which counts Levi's and Selfridges as clients. "It's how they project what tribe they belong in."

That's exactly what The Line's creative director Vanessa Traina was going for when she launched The Apartment, the e-commerce site's physical space located in a third-floor loft in New York's Soho. Complete with a kitchen, dining room bedroom and bathroom - all filled with for-sale items, down to the art - The Apartment has since expanded to Los Angeles with a similar concept.

One thing these stores often have in common, apart from their apartment-like design, is what Prop Studios' Roberts calls "generosity of space." Empty, breakout spaces give customers space to relax, rather than packing square footage with product. It is "the place where you feel no pressure and which is very welcoming - like your house - where you don't feel like you haveto shop, you just want to hang out there," says Morgane Sézalory, the founder of French online brand Sézane. L'Appartement, the physical extension of the label in Paris and New York, has sell-through rates of over 90 percent.

Often, these stores take the idea of sparseness to heart, only stocking a minimal amount of the product they sell. Consider Moda Operandi's showrooms in London and New York, whose personal shopping experience for VIP clients is set in a townhouse concept - designed for a "woman who is accustomed to shopping online and finds department stores or boutiques a bit old fashioned and time-consuming," Lauren Santo Domingo, co-founder of Moda Operandi, tells BoF.

For a high-net-worth client whose home may be designed by Peter Marino or Jacques Grange, the bar is high. At Moda Operandi's showrooms, in-store merchandise is scarce - unlike neighbouring Madison Avenue stores - with few key pieces on display. Instead, selected items are shown to customers according to their online shopping habits. Santo Domingo says both spaces became profitable within nine months.

Apartment-style stores can also function as hubs for community building. "When customers feel part of a brand community, it builds a certain loyalty as the brand has a human face that feels friendly and engaging," says Jason Traves, co-founder and chief creative officer of Lucky Fox, a visual merchandising company that works with and Harrods. "Once you have bought into the brand lifestyle, you are then more likely to buy more product and become a regular customer."

Kitri, an online-only retailer which in September opened its first apartment-style pop-up store in London's Marylebone, saw sales jump immediately. "What gives a better sense of the brand, more than just having a beautiful apartment-style store, is having an activeness about the store," says founder Haeni Kim. Late-night shopping events and talks by influencers have built a tight community and physical touchpoint around the brand. In the most recent event, "we ended up sitting down on the floor in the changing rooms, having a drink. It turned into a bit of a party," she says.

Peter Pilotto aligned the opening of its pop-up store in South Kensington with London Fashion Week and Frieze to harness the influx of visitors from the art and design communities, and line up in-store events accordingly. The pastel-coloured space not only sells the collections, but also antiques from Schmid McDonagh and special glass pieces from Jochen Holz, among others. "[It's] the idea of a house, not of shop per se," says Pilotto, co-designer of the label. "Our customers follow fashion as much as they follow design and art, and it is a unique experience to see all of these three worlds blend together in one address."

Now, fast fashion is getting into the apartment stores game. With 84 retail outposts around the world, 38 of them in Spain alone, Inditex-owned Uterqüe's Barcelona flagship, which is designed to look more like a "designer apartment" than a store, features sculptures from the '50s, Persian rugs and bespoke French antiques. Unlike its Inditex counterparts, Uterqüe is also publishing an art book, and there are plans to remodel select Spain-wide stores in this fashion. It recently tapped designer and influencer Giorgia Tordini to front a collection.

"In a way, they're playing the game quite well," says Stylus' Baron. "Fundamentally you're not going to get huge differentiation [if you're a fast-fashion brand], whereas with this there's a sense of localisation."

But while apartment stores may hit the mark when it comes to visual merchandising, authenticity and community-building remains core to an effective strategy. "People are very smart and they get it's not been personally curated," says Prop Studio's Roberts. "If you go into the same apartment 50 times then it becomes a luxury high-rise developer version of an apartment, it loses its bespoke feel."
Related Articles: In a Direct-to-Consumer Era, What's the Point of Showrooms? Lights, Camera, Selfie! 10 Boutiques Winning with Gen-Z

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LONDON, United Kingdom - Tucked away on Lexington Street in London's Soho district is a bright ground-floor space, minimalist in design, yet sophisticated in taste. A set of Pierre Jeanneret "Clerk" chairs stand beside a Yves Klein table artfully covered with vintage copies of World of Interiors magazine, while there are hanging mobiles by artist Manuel Marín and Picasso plates.

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The latest news, analysis, data and video on department store retailing including M&S, Next, House of Fraser, Debenhams and John Lewis.

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Department Stores: The latest news, analysis, data and video on department store retailing including M&S, Next, House of Fraser, Debenhams and John Lewis.

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Opportunities and challenges for department stores

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Opportunities and challenges for department stores

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How the effects COVID-19 will challenge department stores

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Distinction or Extinction: Four Ways Department Stores Must Evolve to Survive

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The well-worn, global story of the struggling department store shines a stark light on the crisis facing high streets and malls everywhere. There are some retailers, however, that are tackling this challenge head on by revitalising the multi-brand store as a multi-experience platform.

At Start, we believe there are lessons to be learnt from how these game-changers are leading the resurgence of the department store sector.

It's been a challenging couple of years for traditional multi-brand retail. In the UK, we've seen big household names such as Debenhams, House of Fraser and Fenwick, who in their heyday were stalwarts of our high streets, yet now flounder in the face of declining footfall. This is due to a combination of shaky consumer confidence, constant pressure on pricing, and the relentless rise of online equivalents with deeper ranges and broader choice. Even the seemingly unsinkable John Lewis has reported a drop in profits, laying the blame at Brexit's door.

It's a similar story in the US, with Barneys, Sears, Macy's and JC Penney suffering in an over-stored market. A plethora of innovative, direct-to-consumer (D2C) brands worldwide are also applying further pressure, bypassing department stores altogether in favour of their own social, digital and physical channels.

The upshot of all this is clear. The department store, as we know it, is almost certainly taking its' last breath, unable to respond fast enough to the radically different ways consumers shop. Let's face it, these days a neglected department store hardly cuts it as a millennial's shopping destination of choice.

Disruptive multi-brand experiences

So, if consumers don't want them and brands don't need them like they used to, can the 'department store' still play a valuable role in the future of retail? There are some shining examples of resurgence from the likes of London's Selfridges or Galeries Lafayette in Paris, now famed for their experience-based strategies. Selfridges recently turned its store into an of art gallery for its 'State of the Arts' campaign. Its windows featured work by renowned artists, and visitors could follow an art trail around the store. Nordstrom and Macy's in the US, as well as newcomer Neighborhood Goods, are experimenting with smaller formats and new platforms to entice customers and brands back into their stores.

However, it's a new breed of smaller, more agile, multi-brand retailers that are really shaking things up. The most successful are based on a mixed retail model. This involves a blend of both physical and digital channels, each informing and supporting the other, whilst delivering highly curated products and experiences sharply focused on meeting their customers' needs and expectations. Think of Wolf & Badger, Sevenstore, Dover Street Market and Browns. Destination concepts all offering something unique to their location, their customers and their communities.

Content, Collaboration and Creativity

We believe there are four overriding factors uniting the success of many of these multi-brand trailblazers, giving retailers everywhere an inside track on how to evolve and activate their stores for today's shoppers.

They're all 'experiential merchants'

In the words of retail prophet Doug Stephens, those doing it well understand the value of being a true 'experiential merchant' (and are committed to redefining physical retail beyond a place solely for transactions. 10 Corso Como - one of the first multi-brand concept stores - is the ultimate 'slow' shopping experience. Its stores are the antithesis to internet shopping, designed to encourage people to spend time, linger and discover. They host regular events and exhibitions, from book launches to photography shows and collaborations with designers, architects and brands. It's a concept that's been highly influential - paving the way for legacy retailers such as Selfridges to similarly reinvent the traditional department store experience.

Each of these multi-brand trailblazers is a skilled content editor, presenting a curated and revolving collection of products, services and experiences based on a deep understanding of their customers, their community, their brands and locale. Sevenstore, probably the newest kid on the block, is a great example of a concept with content and community at its heart. We helped design its latest store in Liverpool aiming for the store to constantly reinvent itself, with an entirely new edition of its store coming to life every seven weeks. A curated program of content, inspired by Liverpool's own creative culture, intertwines music and art with changing fashion collections. The result is a store that delivers fresh experiences to drive footfall and increase sales across all its channels.

These brands understand that they're only as good as the company they keep, and
are experts at uniting brands that feed off one another. These concepts nurture their brand relationships, giving them the control over the selling environment they crave, often providing hyper-local insights into the bargain.

Concept store, KM20 is Moscow's answer to Dover Street Market. KM20 is credited with bringing international brands, such as Yeezy and Raf Simons, to rub shoulders with emerging Russian designers for the first time. Its newest mega store is designed to bring out the best in the brands it showcases. It launched with a rolling programme of capsule collections from a host of brands, such as Gosha Rubinsky's football-inspired installation and Off-White's distinctive recreation of an ancient temple.

The examples mentioned so far, are all masters of elevating the different elements of visual design to create a unique experience. Whether it's KM20's upended, raw luxury aesthetic, 10 Corso Como's eclectic, sensorial palace or Sevenstore's industrial minimalism, each has crafted its own visual language that strengthens their overall appeal for both brands and shoppers. For example, the team behind KM20 understand the role a strong design aesthetic can play. The concept gets it just right; subversive enough to give the space the identity it needs to pull in its target shoppers and a perfect canvas to showcase the provenance of the brands it plays host to.

Rewarding Experiences

Far from dying out, multi-brand retail is a sector to watch, as both legacy businesses and bold, new concepts respond in different ways to changing market dynamics.

Recent data from the CBI shows that online retail sales - especially for fashion - are displaying signs of plateauing compared to a year ago. Combined with various research that tells us the majority of purchases still touch a store somewhere along a customer's journey, it's clear that the opportunity for physical stores continues to ripen. Going shopping is still something people enjoy. But physical stores need to give us a reason to visit, beyond making a purchase and those with a rich, multi-experience strategy are well on the way to doing just that.

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Distinction or Extinction: Four Ways Department Stores Must Evolve to Survive * Advertising Week 360 * AW360

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The well-worn, global story of the struggling department store shines a stark light on the crisis facing high streets and malls everywhere. There are some retailers, however, that are tackling this challenge head on by revitalising the multi-brand store as a multi-experience platform.

# data[].attributes.attachment_link.readable_text
It is not uncommon to see retail stores that are so out-of-date they look like backdrops to old films, but generally retailers have always been passionately interested in finding out what will be the next best thing in shopping.

They visit one another's stores and copy what they like most. A hundred years ago, visiting a department store was the most thrilling thing ever, such a range of goods, displayed to perfection in what seemed like palaces of commerce.

The 'Next Best thing'

In the last 50 years the next best thing of course has changed a great deal. It has included the shift to self-service with the new Supermarket (and later the Hypermarket or Superstore) seen as the essence of the Future-Store. Self-service and self-selection is the norm these days in virtually every store. Eliminating slow checkouts and lengthy queues, a typical bugbear of most shoppers, has involved better layout, EPoS (electronic point-of-sale and laser scanning), automatic card readers, customer self-scanning machines and contactless payments. EPoS has provided customers with an itemised receipt and retailers with accurate information about stock and detailed information about who buys what and what time of day.

The Future-store versus Online

I used to think that the Future-store was all about technology, but that is wrong. Probably. Obviously the most important type of Future-store at present is online retailing. Initially a method of buying books and music in the early 1990s, which has moved the retail store from the mall or high street into the customer's own front room. Most medium and large retailers now have their own ecommerce operation and one of the main Future-store questions for them is how to balance their ecommerce operations and IT with the way their physical stores operate. They must ensure the same customer is treated in the same way by each part of the business. This approach, termed omni-channel, is an aspiration today rather than an approach that any retailer is yet using, but it certainly will be the data bedrock of the retail Future-store.

Many Large Stores Now Obsolescent

Retailing has certainly not stood still in the last 50 years. Stores have got bigger and bigger: in 1965 the UK definition of a supermarket was a 3,000+ square feet store with self-service. This would now be regarded as a tiny convenience store. The problem that many multiples now have is that their stores are too large. Some of the merchandise that used to help fill the sales area, such as music, videos, CDs, small electrical goods, homeware, kitchenware goods, clothing and babyware, are now bought from discounters or online. Hence the approach to remodel stores, making them smaller, to add services such as dry cleaning, clothing repair, cafes, and gaming studios, to invite competitors to open concessions, or to partition the stores to make three stores where there was once one.

New Technology

New technology probably will be an important element of the Store of the Future. Some people think that the Future-store is only about using new technologies, although our view is that this is mistaken. If physical stores are to survive they need to add something different to the shopper's experience - something they cannot get online, but if the new stores are too slow, inefficient or too expensive they probably won't be the Store of the Future for very long. Moreover, technology-intensive stores will have much higher costs than other stores and this probably means they will be confined to major shopping destinations. However it is true that technology costs normally fall with mass production so that a product like a virtual 3D mirror (which shows you what the garment looks like from every direction and can even change the garment's colour without the customer needing to put a fresh garment on physically) may potentially become very common.

New Technology is Limited by People

However people don't necessarily embrace technology warmly. Customer self-scanning is still seen as problematic five years after the major push to get shoppers to use them. The reasons are probably partly technical (they are very clunky and slow to use) and partly psychological (they are not private enough). Even Amazon Go stores, which have received tremendous favourable publicity a year ago, have a limited range of goods and the average customer spend is currently very low, suggesting that technology alone is not the answer.

Some New Ideas about the Store of the Future

Below is a list of videos with some new ideas. Some ideas are terrible (facial recognition), some practical (refills or subscription services) and others involve high tech that is worth considering ( shop and Go and automatic RFID-based no-wait scanning). Several are made by companies to help sell their products, but they are still very interesting. We have not been paid to recommend any of these videos. As you might expect, there is some repetition. There is no need to watch every single one.

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It is not uncommon to see retail stores that are so out-of-date they look like backdrops to old films, but generally retailers have always been passionately interested in finding out what will be the next best thing in shopping. They visit one another's stores and copy what they like most.

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Opening Ceremony LA

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Opening Ceremony was founded in 2002 by two friends from UC Berkeley, Carol Lim and Humberto Leon, as a place to share their passions for travel, art, and fashion. Inspired by a trip to Hong Kong, the two decided to leave their jobs in corporate fashion to realize their unique dream. What began as a single store on a quiet street in downtown New York is now a global community with outposts in New York and Los Angeles, a department store in Tokyo, a wholesale showroom, an in-house clothing line, a blog, and an e-commerce site.

Taking its name and mission statement from the modern Olympic Games, founded by Baron Pierre de Coubertin, Opening Ceremony adopts a multinational approach to retail. In addition to stocking both iconic and emerging homegrown designers, every year OC showcases the spirit and merchandise of a visiting country, transforming each store into a marketplace for exotic souvenirs and international talent.

Today, OC continues to grow according to its founding principles of exploration and friendship, working with a family of contributors to forge a creative environment that reaches far beyond the fashion world. Over the years, Opening Ceremony has collaborated with brands including Rodarte, Topshop, Pendleton, and Maison Martin Margiela, and has become known for its projects with creatives like Spike Jonze, Terence Koh, and Chloë Sevigny. In 2011, Carol and Humberto embarked on a new journey as the creative directors of Kenzo, taking the storied French fashion house into a colorful new chapter.

ABOUT OPENING CEREMONY NEW YORK

Opening Ceremony New York was the first store opened by Carol and Humberto and remains the heart and soul of OC. Located at the intersection of Soho and Chinatown in downtown New York, 35 Howard Street sits at the center of a buzzing creative neighborhood. Refurbished by Carol, Humberto, and their friends and family, the store was the first instance of the DIY ethos that has defined OC ever since.

OCNY officially opened its doors in September 2002, but not before Carol and Humberto had thrown one of their now legendary parties in the space. From providing a backroom hangout for OC friends in the early days to staging an in-store Ratatat concert in 2004 and a 72-hour retail marathon in 2008 for the opening ceremony of the Beijing Olympics, OCNY has always doubled as a clubhouse for artists, designers, friends, family, and anyone who shares the OC spirit.

Today, OCNY is comprised of two stores. The second space, located next-door at 33 Howard Street, houses menswear by brands including Acne, Band of Outsiders, Kenzo, Jeremy Scott, and Opening Ceremony. The original store now occupies four stories of 35 Howard Street and features a shoe gallery in the basement, a kid's corner, a bookshop, and four floors of womenswear. Brands stocked at 35 Howard Street include established designers like Alexander Wang, Proenza Schouler, Rodarte, Patrik Ervell, and Pamela Love, as well as a range of up-and-coming talents. Both OCNY stores also play host to OC's annual visiting country, showcasing the most creative and colorful designers of the year's chosen destination. With constantly evolving store displays, visiting OCNY is always an act of exploration. Zines, souvenirs, and art installations make every shopping trip feel like a voyage of discovery.

ABOUT OPENING CEREMONY LOS ANGELES

Opening Ceremony opened its Los Angeles store in April 2007, on La Cienega Boulevard in West Hollywood. Located in Charlie Chaplin's former dance studio, the sprawling two-floor space was designed to echo the Southern California mall culture of Carol and Humberto's teenage years. The store represented both a new chapter and a homecoming for OC, and continues to give off the laid-back vibes of its founders' home state.

Downstairs, OCLA's expansive shop floor stocks a full selection of Opening Ceremony brands. Upstairs, Carol and Humberto's mini-mall concept is played out with a series of designer shop-in-shops. Brands including Acne, Mayle, Topshop, Alexander Wang, Band of Outsiders, and D.A.P. have occupied individual shop spaces designed to showcase each brand's aesthetic. Also unique to OCLA is the Little House of Accessories. The cute clapboard cabin houses shoes, bags, baubles, and a special collection of estate jewelry curated by Carrie Imberman of New York's legendary Kentshire boutiques. OCLA is also an outpost of broader OC culture on the West Coast. The store has hosted an inflatable art installation by Spike Jonze-filmed by Gia Coppola-a Moroccan bazaar, Fashion's Night Out, and countless barbecues.

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Opening Ceremony was founded in 2002 by two friends from UC Berkeley, Carol Lim and Humberto Leon, as a place to share their passions for travel, art, and fashion. Inspired by a trip to Hong Kong, the two decided to leave their jobs in corporate fashion to realize their unique dream.

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The current worldwide pandemic is forcing through some of the largest retail changes since the dot com boom of the mid 90's. Those that have never before ventured into online sales are scrambling to do so, online services are pivoting in order to stay afloat and retail supply chains are being tested; all while online sales are soaring for some and slumping for others.
It is estimated that by June the UK economy could shrink by 35%, potentially returning to its pre-crisis growth trend by the end of the year. Even this scenario sees an economic contraction of 12.8% for this year in total, according to the Office for Budget Responsibility. For many businesses, these risks and recent events highlight the need to modernise and become online ready in order to continue trading when traditional brick and mortar stores become unreachable.

BBC

Rapid ecommerce adoption

Circumstances like these expedite the already rapid transition of commerce to online sales; known as ecommerce. Usually widespread adoption of something like making purchases through websites is a trust that evolves with generations of users. Younger consumers who never knew a world without the internet have both far greater trust for online retailers and payment gateways and different expectations and norms when it comes to making purchases. However, the current situation has encouraged older and less technically competent users who would not have previously explored online retail to begin doing so.

Related: Ecommerce website design for different buying styles

Even large organizations like supermarkets that already had significant online capabilities in place have fallen short of demand and are making permanent investments expanding further into ecommerce to meet the growing demand. Government data is being used to help target and provide online sales and home delivery to those that are especially vulnerable, further accelerating the adoption of ecommerce among those that may not have previously been a typical customer.

Worldwide e-commerce sales were already expected to grow from $2.92 trillion in 2018 to $6.54 trillion in 2023, according to the 2019 Global E-Commerce report by Emarketer. This growth is because of the strong online shopping market in countries like China, the U.S., and the U.K. South American and Asian markets are rapidly rising, too, with Mexico, India, and the Philippines having more than 30% growth in 2019.

Airbnb

The world will have to react to the economic fallout over the next few years, and those businesses that are prepared to meet the changing expectations of consumers will survive and even flourish. Some large, established businesses like Airbnb are particularly affected by national lockdowns and the crumbling of the tourism industry. As a result of this, they have temporarily diverted their significant resources into alternative offerings, such as their new Online Experiences.

Airbnb

This new concept supports Airbnb's existing users and infrastructure, while evolving in the face of modern challenges. Users can book anything from virtual farm tours or guided meditation to creative writing and drawing lessons, all run by Airbnb hosts who have also been massively impacted by no one renting their properties. Airbnb hosts are provided with a way to monetize their expertise or local area and users can book virtual tours or classes instead of having to visit these locations.

This is an especially brilliant move as it not only opens alternative revenue streams for Airbnb itself, but also supports the hosts financially through this period so that they can still operate on Airbnb on the other side of all off this. Airbnb relies completely on its hosts who rent their properties through its site, so it is essential that they create realistic ways to help them cover costs as much as it needs to cover its own if it is to survive.

The government has rolled out a pot totaling £330 billion to help struggling businesses as well as paying 80% of the salary of those who are still employed but without work to do. Even with these measures, 20% (over 1 million) UK businesses could close before the end of the lockdown and pandemic, or as a result of the fallout over the rest of the year. According to the British Chambers of Commerce, most firms only have at most three months cash in serve, with one in five having reserves for less than a month.

For most businesses the change will not be so drastic as with Airbnb. Retail outlets of any size or scale must however look at their ecommerce options in the near future if they are to survive.

The aftermath of coronavirus

As the immediate impacts of the coronavirus pandemic begin to subside for individuals, businesses and the economy will return to the forefront of interest and concern. Most of the changes that we are seeing are unprecedented, making the scale of the impact impossible to predict fully, but there are some outcomes that we can predict.

After being cooped up inside for what will likely end up being months on end, consumers will be very keen to go outside, meet friends and spend time together out of their homes. Businesses that have suffered as a result of the lockdown but survived will prosper post lockdown, as the demand for such activities and opportunities to socialise will skyrocket. While some consumers will face financial hardships as a result of the pandemic, many will be looking to resume plans that were put on hold. This includes not only going out, but making purchases, resuming decorating or building projects, selling or buying homes, starting businesses and booking holidays.
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While competition in some areas may be spread thin as companies go under or pivot as a result of shifts in demand, innovation will flourish as it always does in challenging times. With the evolution of client expectations and trust in online, those that look to utilise the web in new and different ways will reap the greatest rewards. We will likely see a greater shift to online sales than has been seen in a single instance before, with the factors that differentiate good online web stores becoming more prevalent and important than ever.

Retail sales during a crisis like Covid-19 outbreak follow a typical trend over a couple of months. After the initial steep decline, a steady recovery is usually seen within a return to norm after only a few months.

There are already a range of inventive scams aimed at cashing in on the fear that people have and the misinformation that they have seen about cleanliness and risk during the coronavirus pandemic. In the coming months, this trend will likely increase as Covid-19 is used as a comparison when talking about other possibilities and risks that we may face in the future. While it pays off to be prepared for such eventualities, there will be new apprehension and uncertainty when selling based on or around the topic of healthcare, pandemics and preparation.

The important factors in online ecommerce shop build and operation are more important now than they have ever been. The design, functionality and speed of each ecommerce site and platform will be tested and judged like never before as retailers battle to retain existing customers and bring in the massive wave of new, online confident shoppers.

How have you been impacted by the coronavirus epidemic? Let us know how you've been affected or what opportunities you think might exist post lockdown. Email hello@minttwist.com or get in touch via our social channels.

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The changing e-commerce landscape: What will online retail look like after Coronavirus? MintTwist

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The current worldwide pandemic is forcing through some of the largest retail changes since the dot com boom of the mid 90's. Those that have never before ventured into online sales are scrambling to do so, online services are pivoting in order to stay afloat and retail supply chains are being tested; all while online sales are soaring for some and slumping for others.

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Please add your research, articles, comments, images and ideas about online department stores

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Please add your research, articles, comments, images and ideas about online department stores

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