NEW YORK, NY - NOVEMBER 21: Economic Club of New York's fireside chat with Michael Dell at the Hyatt ... [+] Hotel on November 21, 2019 in New York City. Dell was made a private company in 2013 by Michael Dell, Dell's founder and CEO, and Silver Lake Partners. Dell is staging a comeback to the public market after taking refuge as a privately-held business. Dells redeveloped strategy is on delivering private enterprise customers cloud, big data, mobile and security. (Photo by David Dee Delgado/Getty Images)
Lets face it, apparel sales are way down in this pandemic period. In response, stores are shrinking the departments dedicated to fashion. Even handbags, one of the main accessories to a smart suit or dress, are selling only by appointment. A major change has overcome shoppers of all ages they are taking a leaf out of the younger millennials book and realize they do not want or need to own very much of anything.
Recently I met with Professor Mark Cohen, who is Director of Retail Studies at Columbia Business School, and discussed the current trends in retailing. He held up his I-phone and said it was the current fashion statement in retailing. He said many people are now waiting for the Apple 12 I-phone because they want to have the latest in fashion technology. Discretionary spending has veered from the little black dress to the little black pocket computer - AKA cell phone.
While traditional department stores have stopped selling technology Macys used to be big in this classification, Apple has sprouted stores in most major malls and Samsung has many outlets throughout the 48 states. New versions of phones are desired, even if they are too large to wear in a shirt pocket. Why are stores too conservative to accept the truth about the needs of the American consumer? My comment about millennials was not accidental; it is true that young people prefer to talk about technology rather than what to wear.
On Sunday, the New York Times published an interview with Michael Dell and his comments about the future of technology are worth noting. He sees 2020 as a tragic year with all the economic disruption that has taken place. Yet, he sees the year as amazing at the same time since so much business, commerce, and healthcare continued to find ways to keep operating even while the pandemic was going on. He believes that this would not have been the case 15 or 20 years ago. Mr. Dell says that we are just at the beginning of tech really redefining how we live and conduct business.
There have been many baby steps in developing technology for retailing. I remember the magic mirror, made-to-measure jeans by Levi, augmented reality and virtual reality for furniture placement, automatic checkout technology, and visual search technology - all caused a ripple of interest briefly by senior managements. However, technological advances never received the backing to succeed; one exception is BOPIS (Buy on-line, pick up in store) which has been adopted by the whole industry. Yet, I think that the young millennials and GenZ customers would have been happy to test the validity of other technological developments which might have added to the ease of shopping.
The department store is quickly becoming the ablatros of yesteryear. It no longer holds any attraction and must change its mission. No longer is fashion the news of the day, the fashion sales are tired, and there is nothing exciting and new that attracts customers. In this environment, dollar stores become stars and off-price stores heroes. It is time for stores to break their long term relationships and instead select vendors that are fresh, hip and innovative.
For instance, the cosmetic industry has sprouted many young companies that have appeal. Glossy reports that Glosslab plans to open seven locations in the next 18 months. While Ulta is closing 19 locations, it plans to open 30 new stores in 15 states. Ever/Body opened its first store in June in Soho and a second location in the Flatiron district at the end of July. It is an indication that young companies will push for success. Glosslabs founder and CEO, Rachel Glass, points out that landlords in New York City now offer more flexible leases, including revenue-sharing agreements or smaller base rents.
I see growth by entrepreneurs and more technological advances. The changes are for the good. Retailing is not dead, but it is changing to accommodate new customer behaviors and shopping dynamics.
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