Episode 22: The Sky is Falling

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Changing of the Guards

  • Some call this a retail apocalypse – 3,500 stores expected to close over the coming months
  • Better looked at as the “change state” of an evolutionary period
  • Mall traffic is through the floors and the old guard fashion retailers are hurting

http://www.businessinsider.com/fashion-brands-disappearing-across-the-us-2017-3

http://uk.businessinsider.com/death-of-fashion-series-overview-2017-3?r=US&IR=T

What’s Happening to Fast Fashion?

  • Hennes & Mauritz AB said price cuts to clear inventory over the next three months may exceed last year’s, sending the shares tumbling to a four-year low.
    • H&M’s inventory levels are up 30 percent year-on-year and profit will be hurt should the retailer have to offer deeper discounts
  • Sales in the year to date (10-15%)haven’t lived up to H&M’s expectations, Chief Executive Officer Karl-Johan Persson said in an interview
  • The Swedish company is struggling to keep pace with Zara owner Inditex, which has put a greater emphasis on e-commerce and has proved more adept at responding to shifts in consumer tastes
  • The retailer said it will open its first Arket outlet in London in the fall, selling clothing and a limited range of home furnishings at prices slightly above the company’s main brand
  • Arket is the company’s first new label since the launch of & Other Stories in 2014 and will include products for men.

https://www.bloomberg.com/news/articles/2017-03-30/h-m-slides-as-retailer-warns-on-rising-cost-to-clear-inventory

https://www.forbes.com/sites/bryanpearson/2017/04/04/discounting-can-cost-retailers-millions-by-not-selling/#55c6cad16045

Growth Amid the Apocalypse

  • The first three F21 RED stores will open in April in key retail markets across the U.S. including San Antonio, Texas, Bronx, New York and Chicago, Illinois. New locations will continue to open throughout the year in key cities and will bring F21 RED total store count to more than seventy locations by year-end.
  • A new concept store for Forever 21, Inc., F21 RED delivers a deeper inventory of the trend-led staples Forever 21, Forever 21 Men, Forever 21 Plus and Forever 21 Kids is known for carrying, at a great value to customers.
  • F21 RED launched in 2014 and aims to create a convenient shopping experience for the entire family with an assortment of fashion staples from Forever 21 and its sub-brands, including Forever 21 Men, Forever 21 Plus, and Forever 21 Girls.
  • Forever 21,  is a fashion retailer of women’s, men’s and kids clothing and accessories and is known for offering the hottest, most current fashion trends at a great value to consumers. This model operates by keeping the store exciting with new merchandise brought in daily. Founded in 1984, Forever 21 operates more than 815 stores in 57 countries

http://www.prnewswire.com/news-releases/forever-21-continues-to-expand-f21-red-in-2017-300435205.html

 

Episode 21: The Iconic Advantage. An Interview with Soon Yu, former Global VP Innovation VF Corp

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In this episode, José interviews Soon Yu, former Global VP Innovation at VF Corp and book author. We learn about his background in retail building and innovating brands for 20 years. Soon’s new book is called The Iconic Advantage – more info can be found at www.soonyu.com.

Episode 20: Know it alls, Store No. 8, The fall of the mall rats

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Know it Alls

  • About 83% of shoppers believe they’re more knowledgeable than retail store associates, though 79% say being able to engage with knowledgeable store associates is “important” or “very important,” according to a new survey from Tulip Retail.
  • Meanwhile, 63% of consumers prefer to shop both in-store and online, and 64% of respondents said physical retail locations will be part of their shopping journeys in the future.

Store No. 8

  • Wal-Mart is creating a Silicon Valley-based retail startup incubator designed to nurture and accelerate to market cutting-edge technologies including virtual reality, drone delivery and personalized shopping.
  • Store No. 8 is somewhat like corporate venture arms at other companies and will be charged with identifying emerging technologies that could prove useful.. It will also strike strategic partnerships with other promising young e-commerce companies.
  • Marc Lore, the president and CEO of Wal-Mart’s U.S. e-commerce unit, announced the incubator — dubbed Store No. 8 in honor of an early Wal-Mart location home to some of founder Sam Walton’s most ambitious experiments
  • ‘’startups that have a responsibility to change the course of retail,” “The focus is not just on today,” Lore said. “Think bigger.”
  • Adds onto recent purchases post-Jet — Moosejaw, Modcloth, and Shoebuy
    • Head of Jet.com is the head of e-comm. All of these are e-comm transactions.

The Fall of the Mall Rats

  • There are 1,221 malls in the US today, according to the International Council of Shopping Centers (ICSC). The number of malls increased by more than 300% from 1970 to 2015. Given the oversaturation of malls in the US, we believe that at least 30% of malls—mostly within the C and D classifications—need to be closed.
  • Malls classified as A properties are the most productive: they account for only 20% of all malls, yet represent 72% of total mall sales.
  • Even though retail traffic at malls has declined, retailers such as Tesla Motors and Apple are choosing to locate stores in malls in order to expose their brands to meaningful traffic.
  • The top 10 malls in the US see average sales per square foot of over $1,000. Four of these malls are located in Florida and two are in New Hampshire, which has no sales tax. Two are in tourist locations and two are outlet malls.
  • Other reports in this series will analyze department stores in malls, trends impacting malls, malls’ evolution and store concepts that are expanding.

Full report here

 

 

 

Episode 19: Gen Z loves brick & mortar, High-end dept stores getting creative, TJX ‘home market’ stores

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Gen Z Loves Brick & Mortar

Sixty percent of Gen Z shoppers still prefer to purchase in-store, and 46% will still check in store to get more information before making an online purchase. In the U.S., 77% of Gen Z respondents said that brick-and-mortar stores is their preferred shopping channel.

The research also revealed that Gen Z shoppers are interested in new shopping methods. Nearly three-quarters (73%) of Gen Z shoppers are interested in curated subscription-type offering for fashion, and 71%  are interested in automatic-replenishment programs, with an overwhelming majority willing to shift more than half their purchases to a retailer offering this service.

Some takeaways:

  1. The majority of US consumers have purchased apparel both online and offline, however, brick-and-mortar is still the dominant transaction channel.
  2. In fact, US consumers’ attitude towards fashion and their purchase behavior has changed little over the past five years.
  3. We expect brick-and-mortar to remain the dominant store format for US apparel and footwear retail in the near future.
  4. As retailers have shifted their budgets to digital advertising, the influence of all major media channels has decreased in the past five years, except for social media and mobile video.
  5. Among millennials, the influence of social media on apparel purchases is on par with traditional media like TV and magazines.

High-end Department Stores Getting Creative

Like many retailers, the high-end department store’s sales have suffered from a dwindling number of in-store shoppers. Rather than disappear, they are making an attempt at bringing people back into their stores through interactive tech. Will it work? We don’t know.

Some examples of efforts Neiman Marcus is making:

  • Memory Mirror
    • The Memory Mirror is a full-sized shopping mirror where shoppers can record themselves twirling in an outfit and then share on social media (a video demo can be seen here).  It’s been such a hit with consumers that this past December, the technology moved into the beauty department, with Neiman Marcus rolling it out at Le Métier de Beauté beauty counters in at least 20 locations, with plans to expand further this year.
  • Shazam for shopping
    • Neiman Marcus is also introducing Snap, Find, Shop; what they call Shazam (the music discovery app) for shopping. Essentially, consumers can take a photo of a piece of merchandise that they like—say a friend’s pair of shoes—and then the app will find similarly styled items to purchase directly from NM.
    • While the project hasn’t been a success yet, Emmons hope that it will pay dividends in the future as the use of augmented reality becomes more commonplace.
  • Voice recognition
    • In a similar vein to Amazon’s Alexa and Google Home, Neiman Marcus is testing voice-command technology that will help streamline employee communications with the backroom.
    • “It’s a little wearable computer about the size of a key fob and when you press the button you give a voice command. It might be, ‘Hello shoes,’ and it’s going to connect you to an associate in the shoe department or you might say, ‘Hello register help’ and it sends out the all-call for register-trained associates to come man the registers in the store,” Emmons explained. “With future enhancements, it could be things like, ‘Hello SKU lookup,’ and I could then read a SKU and it could tell me which stores had that item in stock.”

TJX to Launch New ‘Home Market’ Stores

TJX Companies — Marshalls, T.J. Maxx, HomeGoods & Sierra Trading Post — is planning to launch a new off-price chain of home good stores. CEO Ernie Herrman told analysts on recent earnings call that the new stores will not compete directly with HomeGoods.

“While we are proud to have grown HomeGoods’ customer base for many years, we believe we remain significantly underpenetrated in the total U.S. home market and enormous opportunity remains for us to gain share in this space.”

The company plans to open four of the new concept stores this year. TJX has been testing many of the home categories that it plans to sell in the new stores for the last year-and-a-half.

Episode 18: WDA Brand Marketing CEO, Dr. William D’Arienzo

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Interview with Dr. William D’Arienzo

Dr. William D’Arienzo is the founder and CEO of WDA Brand Marketing. They help clients achieve their brand strategy objectives and business goals. In the past 25 years WDA Brand Marketing has worked with: Burberry, Brooks Brothers, Kohl’s, Walmart and many other retailers. They develop brand management strategies that generate measurable results.

Brand Management Strategies – Luxury and Mass MarketsWilliam D’Arienzo Phd. Published by Bloomsbury. In his book he explains how a brand can successfully drive global business development using a rigorous analytic and an applied approach, with supporting examples from current fashion apparel and non-fashion brands including: Hermes, Prada, J. Crew, Apple, BMW, Ritz Carlton and many more.