Retail Rap: All Good Things

All good things must come to end — including, after nearly four years, my contributions to this column. “Retail Rap” will soon be forging on without me. This is the first of two final columns I’ll be contributing, and I’ll beg your indulgence if I wax nostalgic at times in this, column number 99, and in my last submission two weeks from now, Retail Rap number 100.



In an industry that is always focused on the next big thing, I thought it would be fitting to talk about what’s next, and about where the future of the retail industry and retail real estate might be headed. Since one of the best ways to figure out where you’re going is to look at where you’ve been, I went back and took a closer look at all of the previous 98 entries in the Retail Rap series.



By looking at the most popular words — shown in the word cloud above — it gave me some insights into topics that have been most critical to our industry these past few years.



Some of what the word cloud showed was expected—or at least unsurprising. While the words less and more both appeared, for example, there has clearly been a whole lot more of more and less of less over the years. For an industry which thrives on optimism and a relentless forward momentum, that seems appropriate. In a way, more is almost literally the name of the game.



I also thought it was interesting that while brick-and-mortar appears 92 times in 98 columns, the word mobile appears 84 times — and online makes an appearance an eye-opening 111 times. Our industry continues to evolve to find a natural equilibrium between those different distribution points. We do know that mobile and online sales are transforming retail in profound ways. One of the consequences of that transformation is a change in the way that we think about sales numbers. It’s not just a brick-and-mortar game anymore, and sales numbers that don’t account for new avenues and new variables can be misleading.



As for specific retailers that appeared in the word cloud, I see familiar names like Target, Walmart, Sears, JCP, and Best Buy. I’ve written quite a bit about those retailers over the years, but for very different reasons. With Sears and JCP, it’s generally about their positioning long term. Unfortunately for those brands, not much has changed in the last three or four years: both are still struggling. I think JCP has done a better job of righting itself, whereas Sears has essentially transformed itself into a different kind of company altogether — one that is more focused on real estate than retail. Best Buy is an interesting case because in many respects it represents a sea change in how people shop. Best Buy has successfully gone to what are essentially store-within-a-store concepts, with branded components inside of the larger Best Buy format.



I’ve written a lot about different retail center types over the years, particularly about traditional malls. While many experts have declared the death of the mall, I’ve maintained all along that they just need to evolve to remain relevant — and, to a large extent, that is exactly what many of them have been doing. The fact that so many online companies are moving into brick-and-mortar is helping malls, and I think we will continue to see more of a new wave of mall retailers moving in — some of which are those emerging online concepts, some international retailers coming to the U.S., and, to a lesser extent, new concepts from existing brick-and-mortar retailers.



I can’t ignore one of the words that has appeared so frequently over the years: holiday. The holiday shopping season may be a recurring theme, but it’s also a changing one: over the last few years holiday sales have had a much smaller impact on overall retail numbers. This is partly because of categories like electronics becoming year-round items, and I think also partly because big one-off events like Black Friday have become somewhat watered down. Today Black Friday is less of a day and more of an idea that represents a few weeks of discount pricing and promotions.



One thing that hasn’t changed since 2011 is value. Value is more than just price, however — it’s defined by retailers in different ways. For some it’s variety/selection, for others an experience or a particular level of service. Typically you’d think value would be less important when the economy improves, but it has actually continued to be an important factor during this most recent recovery. Perhaps not coincidentally, luxury retailers have begun to struggle, and discount pricing still seems to have a broad appeal.



One of the issues that I think will bear watching going forward is the question of just how important is the consumer? The trend has been for retailers to be purchased by private equity firms, and the more this happens, the more this starts to become less about what customers want and more of a financial game. It’s not a good thing for retail, but it’s happening, and it’s certainly worth paying attention to.



For my final Retail Rap, column number 100, I’ll lay out my thoughts on that issue (and some other ideas about what comes next for the industry). I hope you tune back in! What other issues have you seen as critical over the past few years? What have the biggest trends been that we haven’t discussed in this space? Let’s keep the conversation going—don’t hesitate to reach out to me at [email protected].