News

‘Social Retail’ to the Rescue

BY CSA STAFF

By Crosby Renwick, [email protected]

The pundits say retail, as we’ve known it since the ancient Egyptians, is coming to an end. Ouch. That’s big. You have to admit the logic is not bad: When retail is literally everywhere, when we can buy virtually anything off our phones and have it delivered, why go to a store?

This recalls when Pablo Picasso was asked if painting human figures was still possible after the technologies of photography and cinema were depicting them much more truly. His response was, “Now at least we know everything that painting isn’t.” Technology had killed painting’s previous purpose: depiction. But, on the other hand, technology freed painting to become something else.

Retail has always been about bringing mostly other people’s goods together at a location convenient for your customers. Throughout history, retailers added value by giving consumers easy access to a variety of goods. Whether it was a town marketplace, a store, or a mall, consumers had to go to the purveyors of physical goods. Now, retailers come to us through our digital devices.

So, is retail really dead? No, but its role is changing. Many stores will close in the decades to come. But like painting in the time of Picasso, retail real estate has greater freedom to become something new. Sure, demand will persist for restaurants, haircutters, masseurs and healthcare providers — all of which provide things that cannot be obtained in the digital world — but the likes of pharmacies, banks, apparel stores and electronics outlets will close by the thousands because they can’t boost their margins to pay for the space and staff. Once their leases are up, retailers will downsize physical stores to upsize their digital presences. Why pay rent and salaries when consumers are ordering from their phones?

What to do with the empty storefronts? The success of social media provides the clue because it highlights the deep desire for human connection. People get lonely. They’ll pay for the chance to enjoy real-world social experiences with others who have similar interests.

What do I mean by social experiences?

Think of sporting events. You can see most New York Giants games on high-definition TV at no additional cost — and you’re so close to the action you can see the bead of sweat on the quarterback’s forehead. Actually going to a Giants game will run you at least $100 with parking, and you’re unlikely to even be able to make out the numbers on the jerseys. But even with hi-def TV, most of the tickets to the actual experience are sold months in advance. Why? Because of the energy, excitement, vibe and buzz of the like-minded people around you. Memories are made at experiences like these, not in front of the TV. The ceremony of putting your hand on your heart and singing “The Star Spangled Banner” along with the players is a time of reflection, connection and patriotism. And for many of us, the bragging rights of being able to talk about the game in the office the next day is worth the money alone.

And think of some of your fondest college memories — the parties, the autumn leaves in the quad, spring break, football games, not to mention lifelong friends. Today, online education allows millions of people to go to college at a fraction of the cost, and in the comfort of their own homes. However, getting an online degree forces the student to miss out on all of the social and sensory elements of actually going to school. Much like online retail, you can get the “product” in the comfort of your living room, but you miss out on the actual experience of getting a four-year degree on an actual college campus.

If you’re religious you could get all the sermons you want online or on TV. And yet we still like to go. Again, it feels good to be around people who affirm what you believe, and a religious service offers some of the best people-watching in town, along with soaring architecture, stained-glass windows and a pitch-perfect choir — pretty emotional stuff. And let’s not forget the post-service coffee gathering, where there’s always good gossip, new business contacts and donuts.

Finally, a few years ago I paid $75 to go to a Bruce Springsteen concert where I was so far from the stage I couldn’t make out the Boss’s face even with binoculars. I loved it. Hanging out with 70,000 others who think the same thing visibly and powerfully is completely validating to your belief system and your allegiances. You can’t buy that on your phone for all the money in the world.

These are the kinds of social experiences people pay money for. Am I suggesting a chain of stores that hosts rock concerts? No. But lessons drawn from these social experiences can and should be applied to retail. Lululemon has already done so with its in-store yoga classes. Likewise, I’d love a store where I could buy clothes that speak to the sensibilities of the classic rock fan. Where the staff would “get” me. Where I could hook up with other classic rock fans to take a road trip to some cool concert. Where I could make friends with people who appreciate what I appreciate. I’ll pay much more for jeans from there than from anywhere else.

At the very least, shopping in a physical store has to be as much about social experiences, unique environments and customer validation as it is about the merchandise. After all, today’s shoppers can have nearly any merchandise brought right to their doors with little more than the swipe of a finger. But if we can bring them the kinds of experiences that forge memories, friendships and lifelong brand loyalties, they will keep getting in their cars and coming to us — just as they have since the days of the pharaohs.

Crosby Renwick is executive director of strategy at brand agency and retail design consultancy CBX, where he is responsible for strategic positioning, consumer research and innovation. He can be contacted at .


More Web Exclusives/Guest Commentaries

keyboard_arrow_downCOMMENTS

Leave a Reply

P.Verkooijen says:
Jun-05-2013 03:38 pm

Reinventing the offline store
We have been covering this transformation in retail at our semi-annual Social Retail Summits in Dumbo, New York. The offline retail store will become a meeting place for the community around the brand and a place to experience the brand. Brands like Bonobos, Warby Parker and The Monocle Order, speakers at previous summits, are now opening stores. It will be interesting to see how they develop. So far the offline stores of these online direct-to-consumer brands look relatively traditional. Expect the next wave to take things much further.

P.Verkooijen says:
Jun-05-2013 03:38 pm

We have been covering this transformation in retail at our semi-annual Social Retail Summits in Dumbo, New York. The offline retail store will become a meeting place for the community around the brand and a place to experience the brand. Brands like Bonobos, Warby Parker and The Monocle Order, speakers at previous summits, are now opening stores. It will be interesting to see how they develop. So far the offline stores of these online direct-to-consumer brands look relatively traditional. Expect the next wave to take things much further.

Polls

Consumer confidence is high. Is that reflected in your stores’ revenues?

View Results

Loading ... Loading ...
News

Express overcomes cool weather in Q1

BY CSA STAFF

COLUMBUS, Ohio — Express overcame the spring chill and a difficult retail environment, reporting net sales of $508 million for the first quarter ended May 4, a 3% increase from $496 million in the first quarter of 2012.

Comparable sales were flat following a 4% comparable sales increase in last year’s first quarter. This includes e-commerce sales, which increased 48% to $71 million. In last year’s first quarter, e-commerce sales grew 28% to $48 million.

"Much has been written about the macro-economic events and difficult retail environment that made the first quarter so challenging,” said chairman and CEO Michael Weiss. “We successfully overcame those hurdles to deliver results that were at the high end of our guidance. It’s always about the product, and our customers responded enthusiastically to our spring merchandise, which we consider to be fresh and on-trend. While we promoted more heavily in the face of a highly promotional environment, we managed our expenses tightly and ended the quarter well-positioned to achieve our annual goals."

The company plans to open several new or remodeled stores in key malls that reflect its intensified focus on prime hub locations. The company has also been exploring another growth opportunity — outlet stores.

“I’m very pleased to announce that our search for someone to head this business has concluded successfully,” added Weiss, who did not provide further details. “This ensures that we will have the necessary expertise in-house to fully develop this strategy."

keyboard_arrow_downCOMMENTS

Leave a Reply

No comments found

Polls

Consumer confidence is high. Is that reflected in your stores’ revenues?

View Results

Loading ... Loading ...
News

New CEO for Delia’s amid ‘disappointing’ Q1 results

BY CSA STAFF

NEW YORK — Multichannel retailer Delia’s credited exiting brand Alloy and unseasonably cool weather for the dip in its first quarter results for the period ended May 4. Amid the “disappointing” first quarter results, the company has appointed a new CEO.

The company reported total revenue of $35 million, a decrease of 15% from $41 million in the first quarter of fiscal 2012. Revenue from the retail segment was $24.7 million, a decrease of 14% from the same period last year, which included a comparable store sales decrease of 7% as well as an 8% reduction in store count. Revenue from the direct segment decreased 15.3% to $10.5 million for the quarter.

Delia’s consolidated gross margin was 23.8%, a decrease of nearly 33% from 32% in the prior year quarter, primarily due to increased inventory reserves, as well as lower merchandise margins in the retail segment.

The company relocated one store location and closed one store location during the first quarter, and ended the quarter with 103 stores.

“We were disappointed with our first quarter performance, which we believe was the result of product offerings that did not align with our customers’ preferences coupled with a challenging retail environment underpinned by unseasonable weather,” said CEO Walter Killough. “We have taken aggressive action to work through our current inventory and began to make adjustments to our product offerings which have already yielded improved results. With the potential disposition of Alloy, we are currently evaluating our cost structure in order to right-size the business.”

The company has brought in Tracy Gardner as its new CEO, effective June 5. Gardner joined the Delia’s earlier in the month as COO. Killough will remain with the company as COO under his existing agreement.

“I am excited about the opportunity to create a long term vision for the Delia’s brand. While developing and executing a strategic plan will take time, I look forward to working with the team to build Delia’s into the brand we all know it can be,” said Gardner.

keyboard_arrow_downCOMMENTS

Leave a Reply

No comments found

Polls

Consumer confidence is high. Is that reflected in your stores’ revenues?

View Results

Loading ... Loading ...