I love retail, good retail and there isn’t enough good retail these days.
Getting old has many perks, one of which is living through multiple eras of change. I have become more fascinated with history, particularly the booms and busts of each decade. The US economy boomed after WWII, and consumerism was the key; everything has been affected by that. Although Americans like the future, we do not live in the past, like many other countries.
The landscape of retail has changed many times. The past decade felt like watching a slow train wreck. Department stores, malls, and large chains have struggled to reinvent themselves to a new frontier. I have countless theories on why but mostly, the top stores stopped recruiting the best and the brightest as many of them went into money management fields because the retail executive training programs became less robust, and the pay sucks.
I had expected that the shifts in the retail world would have happened earlier, but as I said, slow train wreck. Saks was first acquired in 1998 and then purchased by the Hudson Bay Company in 2013. Last week, Saks bought Neiman Marcus. Saks is gobbling up multiple brands. The company now owns Bergdoffs, Saks off 5th, and Neimans, the only luxury department stores left under one umbrella.
The other shifts were Nordstrums is going private. The Container Store and the Party Store filed for bankruptcy. Over the past month, top designers have made shifts to get out of luxury and jump on the innovating fashion to the masses.
We are in new frontiers. None of these stores will grow in the next few years. They will slice and dice. They will close stores, get out of leases, scale down in size, rethink technology, salespeople, approach, customer, brand, and how to get to the other side and be profitable again.
It had to happen because what goes up always comes down, particularly when it comes to the consumer. Consumers’ tastes, how they shop, and their needs changed, and direct-to-consumer changed everything. Drug stores are closing, DoorDash has changed, grocery is changing, and times are changing. We need a better balance.
We also have Zara, Mango, Shein, H&M, Uniqlo, and Asos, which oversaturated the market with fast casual clothing that is destroying the environment. I hope the designers push for change because someone has to. These stores will all have to downscale, too.
This has a long tail that directly hits the landlords, and that is a good thing. There must be big checks and balances here because the large ground-floor rentals will sit empty. It is the smaller footprints that are renting. Small stores and intimate restaurants are opening all over NY. Again, pay attention to the landscape. Even the Macy’s on 34th Street is rumored to be on the market. Talk about an end to an era.
All of this reminds me of the 80s when the Gap came in and started taking market share away from the department stores. It shifted everything, and this feels very similar, but of course, it is always a bit different.
