A Detailed Look of the Retail Landscape Over the Last Two Decades
The retail landscape has changed dramatically over the last twenty years. At the start of the millennium, the effects of e-commerce were not yet felt, omni-channel retail was just a business school concept, Amazon was a fledgling website and Covid-19 was not even contemplated. Some of the best retail chains were Gap, Limited, Express, Forever 21, Ann Taylor, Dress Barn, KB Toys, and Nine West. Big Box stores were flourishing as well: Sears, Kmart, Toys R us, Linens and Things, Sports Chalet, Sports Authority, Circuit City, Bon Wit Teller, Hecht’s, Marshall Fields, Mervyn’s, and Border’s Books were all relevant. Today these retailers either gone or facing serious hurdles. The questions beg asking: What went wrong?
In some cases, formerly strong retailers have been replaced by providers that offer similar products with better prices, easier delivery, or better online shopping platforms. Toys R us/Babies R us became increasingly obsolete.
Some brands are not as relevant as they once were because they did not evolve with the consumer. Gap, Ann Taylor, Dress Barn saw their once-young customer aging, and struggled to keep pace with their aging demographic. Keeping current, nimble and connected to your customers (both new and returning) in this ever-changing world is more important than ever; loyalty to a brand or a label is a fleeting concept.
Finally, some stores operated in spaces that were ultimately too large. Further, in this day and age, with the endless back of house of the internet, did some of the stores operate in spaces that were ultimately too large or inefficient? Highly leveraged retailers unable to complete with new value propositions and changing consumer preferences combined to produce negative results
In the background of these challenges for retail brands, bad debt is a key element of retailer failures. According to “The Retail Owners Institute” one of the top five reasons retail businesses fail is poor financial management. Lack of control of their balance sheet, magnified by the extraneous factors such as missing the mark with the customers, excess inventory and not being relevant to their customers, has caused the downfall of countless retail brands.
In person shopping experiences are not dead – nor do I see that ever being the case. People are social beings. We value social interaction, curiosity. We want to experience our senses; touch, taste and smell that cannot be replaced online. The internet should not be expected to replace these experiences, only compliment them. However, retailers need to stay relevant, connected, evolving, and priced to their consumer, as well as employ best-practices of financial management. Some brands that have found recent retail success include Wayfair, Five Below, Ulta, Amazon, Tesla, Warby Parker, Vans, and Allbirds. These retailers offer products that identifies; what their customers want, is unique to their category, has become necessary to their customer’s needs, supported by strong service, easy to access and priced to their customer’s budget.