For years, the retail industry has been plagued by high-profile store closures, like Sports Authority, Payless, and Toys“R”Us. These retail chains buckled under economic pressure, but brick-and-mortar stores aren’t necessarily doomed if they can embrace the retail renaissance.
Research from Deloitte indicates that as Americans spend less, it most affects retailers in the middle — those somewhere between discount store and luxury brand. But what can your company do to avoid financial disaster that big businesses didn’t?
Let’s look at what we can learn from three retail stores that couldn’t cut it, and conversely businesses currently finding success.
One of the most high-profile stories in the retail industry this year was the near-miss liquidation of Sears. Rescued at the last minute in dramatic fashion, Sears and Kmart, like many department stores, have struggled for the better part of a decade.
Lesson: You can’t just cut costs.
Falling somewhere in the middle of price and quality, Sears stayed locked into a retail model that failed to adapt. The company focused on cutting costs instead of investing in the customer experience and increasing revenue. When your business sees a drop in customers, you can’t just scale back your expenses — you have to find a way to win back customers and show them your brand is worth supporting.
2. Barnes & Noble
This big-box bookstore, once a behemoth widely criticized for muscling indie bookstores out of the marketplace, currently teeters on the edge of bankruptcy.
Lesson: Expanding your offering isn’t always the answer.
Many cite Amazon.com as the source of much of B&N’s difficulties, but in truth B&N pivoted toward expanding its offerings when it should have narrowed them. It’s overextended for years into unnecessarily large stores with expensive physical footprints and merchandise that distracts from the main commodity: books. Don’t jump right into different revenue streams without first seeing if you need to adapt in your core market.
Children’s clothing brand Gymboree limped into 2019 with store closures in shopping malls across the country. After filing for bankruptcy for the second time in two years, Gymboree announced it would be closing all of its stores while looking for buyers for its other clothing labels, Crazy 8 and Janie and Jack.
Lesson: Don’t alienate your customers if you rebrand.
Gymboree relaunched its clothing line to appeal to a more modern market and generation of kids, but it forgot to test that with its longtime customers. Parents bombarded Gymboree’s social media with complaints when the line relaunched, complaining the style was far from what they preferred. If you change your product to appeal to a new customer demographic, crowdsource and test your ideas with loyal customers to avoid backlash.
Lessons From Companies That Are Thriving
While some think the landscape looks bleak for retail stores, there are companies proving that the channel can yield success. The right business decisions can keep customers coming back over and over again.
1. Embrace Your Online Market
Not jumping into the online marketplace holds any retailer down. One reason Sears fell so dramatically was its low online presence, holding only 0.7 percent of the online marketplace. It’s no surprise Amazon is the leading company it is thanks to growing tech like satellite internet reaching even the most rural areas of the country.
2. Show Your Brand, Not Just Your Product
REI, a high-end outdoor sports outfitter, drives growth through robust social media and marketing campaigns that frame the retailer as a brand with a message. Younger generations love a brand with a purpose, and showing them your brand is more than just a product can win loyalty. REI shows what brick-and-mortar spaces can become, where shoppers see larger stores as places to browse and sit, but reserve their purchasing power for online channels.
The retail landscape doesn’t have one simple answer for success, but you can use these lessons to plan for the future. The industry is changing, and those that can’t keep up may get left behind.
Victoria Schmid enjoys writing about technology for the “everyday” person. She's a specialist in online marketing and consumer technology, and has a background in broadcast journalism.
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