In an interesting article by James Ryan, the retail expert makes a compelling case for the continued relevance of department stores, citing the over use of data for the demise of the retail format that has been around for decades.
Some key points jumped out of the full article that first appeared on Inside Retail; here they are, paraphrased:
- Retail data has dumbed down the shopping experience, removing merchant flair and differentiation.
- The department store concept is not dead, in fact it’s more relevant than before as the market has become homogonised and only differentiated on price.
- Department stores success came from well-trained staff offering solutions to customers needs across various categories.
- Width of range and depth of service drove customers into store
- Capital efficiency could be improved by tightening ranges, but it killed customer connection and drove the price war between department stores.
It got me thinking about Action Sports Retail and if there are any learning’s or similarities we can take from this?
Here’s a few thoughts.
- Our industry needs more product variation and merchant flair. It’s obvious that in a broad category of t-shirts and shorts, there are going to be fashion trends that permeate the lot. Certain looks, colours, fabrics etc – which is all good in love and war, but lets stop blatantly copying other brands looks, colour combinations, prints and fabrics – just because retail data tells us they are good performers. Brand B copying Brand A’s commercial formula does nothing for the long-term game, it just dilutes and homogenizes the category and the industry further. Tough though, when a large percentage of brands own multi brand retail stores with tons of data on competitor product that are being fed around the design rooms.
Let’s compete on remarkable, innovative product – not same-same product at a price point below.
- Surf doors need to differentiate product/brand mix, particularly when a number of doors are present in a particular trading zone. The landscape is changing and retailers will do well to ensure their brand and product mix evolves and moves with the times. Adapt or die.
Things are changing quickly and those who work out the model sooner rather than later are the ones who will have the edge in this next chapter of surf retail.
- Surfing as a participation sport continues to show huge growth. And with the advent of wave pools, surfing in the Olympics and the WSL expanding its reach – the sport is set for another boom. Retailers will do well to position themselves as experts in their respective communities…
That doesn’t mean a rack full of boards and wetsuits, but having true experts in their fields, giving authentic service and advice amidst a compelling and highly experiential retail environment.
- Range and brand selection has never been more critical.
The opportunity for smaller authentic brands with strong messaging is huge – both for wholesale and retail.
Mix that with innovation and technology, like start up Awayco and one can start to get a glimpse of the future surf industry.
- Consumer connection is key. Always has been, but now with so much noise out there – storytelling is paramount. And not made up, shallow bs that any teenager can see right through – it needs to be anchored in something real.
Those who try to hard to curate these messages are being called out – it’s not something you can create, its just something you are.
Food for thought?
The original Inside Retail article is below.
The world of retail is constantly bombarded with claims that data is what drives success. So explain to me how Myer – between Flybuys and the Myer One card database – sits on one of the world’s richest sources of big data, fails to compete with retailers that have – in some instances – none.
David Jones is much the same. Hundreds of millions of dollars of shareholders funds spent over the last three decades on data collection, warehousing and reporting have produced nothing but declining sales and shrinking margins.
Data can only record outcomes. It cannot tell you why. And data can be misleading. What retail data is progressively doing is dumbing the shopping experience down to commonality and – as technologists and financial modellers increasingly dominate the retail world – eradicating merchant flair and differentiation.
Far from being a ‘burning platform’ as some media analysts have suggested, department stores are becoming more not less relevant as a model, as customers struggle with the vast sea of me-too product options where the only life raft out of confusion is cheap price. It’s just that very few leadership teams in modern department stores around the world understand and can execute their proper place in the retail ecosystem.
Department stores used to be THE comparative shopping zone for customers. They should be the number one choice of customers to shop in any fashion or home lifestyle or gift related category. They should be, but very often they aren’t any more. That is because of what they have been allowed to become – little shopping centres rather than comparative and complimentary shopping zones that are a joy to shop.
Retailers like Myer and David Jones used to curate collections and present “this goes with that” stories to customer bases that floor staff knew by name. The store was not arranged in mini-stores (concessions) but rather set up so that customers could browse and select complimentary options in a category and have store staff take them through what would be best for them and why, at the same time as adding more items to the basket by embellishing the initial item to deliver a better outcome for the customer.
Width of range and depth of service is what drove customers into stores because width meant all options and all categories of need in one place and service meant best personal outcome.
Yes – on paper – capital efficiency could be improved by tightening ranges. But it killed customer connection and drove department stores into competition with other retailers who could match them on tighter ranges and beat them on price.
Efficiency is not the sole driver of retail success. Today we have department stores driven by concessions, with no connection between branded range options and very little service in stores that aren’t built for self-service. Historical strength categories have been removed entirely. Yet some are suggesting we combine two poorly performing retailers together as a solution as if ‘synergies’ will solve it.
Our department stores cannot only be saved, in time they can flourish. But ‘can’ and ‘will’ are two very different things and it will take blood, sweat and tears to get them back to where they should be. Something investors are becoming less and less willing to tolerate.
Peter James Ryan is a retail expert and head of Red Communication. 02 9481 7215 or firstname.lastname@example.org.