Retail Rap: The Brandscape Ahead

While there were some reported ups and downs over the course of last year’s holiday shopping season, the early takeaway is that the season was, in the end, positive. While we’ll have to wait for hard numbers for more detailed insight, and while definitive conclusions might be a bit much to draw at this point, it does seem to me like the increased length of the ever-expanding holiday shopping season didn’t have any appreciable negative impact. Regardless of the final sales numbers, that’s at least one positive development we can take away — and, given the way the season seems to grow every year, it might be an important one.



Speaking of positives, here are a few positive developments I see unfolding for brick-and-mortar retail in 2015:



Tis the season

As I mentioned, a solid holiday season certainly kicks 2015 off on the right foot, and it could be a sign of more good things to come for the next six-12 months.



Dollars and sense

The underlying economic foundation continues to be strong. Q3 numbers were outstanding, and while Q4 numbers are not expected to be quite as robust, they are still expected to be solid. The strong stock market might provide a slight boost to consumer confidence, but it will definitely buoy corporate value and allow a number of brands to take advantage of expansion opportunities.



Getting pumped

Lower gas prices might put a few dollars back in the hands of consumers, but the real value for retailers is the reduction in expenses associated with transporting goods. If gas prices can remain low, this promises to provide a nice boost for brick-and-mortar in 2015.



Mobile-ity

Mobile technology continues to be used to increase shopping at bricks and mortar stores. All parties, from retailers to shopping center owners and operators, are getting better at leveraging this new technology to increase store traffic, enhance the in-store experience, get the word out about promotions and marketing opportunities, and ultimately drive sales numbers and improve bottom lines.



So if that’s the good news for 2015, what’s the flip side of the coin? What factors do I think will loom large as potential difficulties for an industry looking to translate its recent successes into a more sustained prosperity?



Real estate realities

An improving real estate market might sound like a good thing, but the reality is that higher rents for desirable retail spaces will just put more pressure on the bottom line for many retailers.



The value trap

I see the growing prevalence of value shopping as an additional challenge for brands to watch out for. Inescapably, lower prices mean lower profits for retailers. While there is a continuing strand of conventional wisdom that the average shopper will “come back to quality” as the economy continues to improve, I see no real sign of that happening. The apparel industry in particular will grapple with value issues, as the continuing growth of “Fast Fashion” (essentially just high fashion at a low price) is making it harder and harder to convince consumers that higher quality (and a correspondingly higher price) is important.



A stickier web

While a more sophisticated utilization of mobile shopping shows some promise for brick and mortar, the overall increase in online shopping is a definite net negative for the industry. Virtual cash registers are taking an increasingly sizable slice out of the available pie, and there’s little reason to think we’ve seen the end of the growth curve for this trend.



Bare minimum

In dozens of states, increases or planned increases in the minimum wage above the federal standard are set to go into effect both in 2015 and in years to come. I have trouble seeing how this doesn’t have a negative bottom-line impact on wage-sensitive retailers in some markets.



Perhaps the biggest factor impacting brick and mortar in 2015 and beyond is neither a positive nor a negative — at least not yet. It is a challenge, an unanswered question with a lot riding on the industry’s collective response: can retailers successfully optimize sales over all distribution channels?



I’d love to hear your thoughts on that, but as far as I’m concerned, that’s the big one. If brick-and-mortar retailers can manage to do that successfully, to evolve and adapt and embrace a multi-channel business model, they won’t just remain relevant, they will remain preeminent in the world of retail for the foreseeable future. Let’s keep the conversation going: Leave a comment below or send me an email at [email protected].