Bidding has begun on Barneys, the iconic fashion brand once known for its trendsetting, exclusive selections. Talk about a fall from grace! But Barneys is just one in a long line of fashion retailers that are struggling. As Retail Dive points out, it’s not a retail apocalypse, it’s a fashion apocalypse: “10 of the 16 major retail bankruptcies were filed by companies that mostly or exclusively sell apparel and/or footwear.” Many more bankruptcies are expected next year.
Since the 1970’s, consumers have reduced their apparel spending by 50%, creating a tough environment for the entire sector. On top of that, the apparel market is flooded with new and existing chains. Writes Neil Sanders, Managing Director of GlobalData Retail, "It is unsurprising that apparel stores are one of the most distressed parts of retail. This sector is saturated with supply and is arguably over-stored."
Which brings me back to Barneys. Whoever buys the retailer better have a great strategy for reviving the brand. According to the New York Times, that buyer is likely to be Authentic Brands Group (ABG), whose $264 million offer was accepted by Barney’s lenders. I hope they know what they’re doing, but I have my concerns. If the New York Times is to be believed, "A.B.G. is essentially betting that the future of retail lies with the abstract values of brand names rather than in-person shopping experiences.” But brands cannot live by brand alone. There’s a real danger is resting on one’s laurels.
Take Jack Nicholson as an analogy. He once quipped he sang Three Blind Mice for two years in a method acting class. His hard work allowed him to rivet audiences with his performances in One Flew Over the Cuckoo's Nest and Five Easy Pieces. But his later work, with a few notable exceptions, is just Jack Nicholson showing up to play Jack Nicholson. As a moviegoer, you know what to expect. You might be electrified, but likely not. The truth is, performances that simply ape past brilliance is no way to build new audiences. People want to be surprised and enthralled. They expect the unexpected.
The same is true for retail outlets, but with much higher stakes. Apparel brands are ecosystems, with customers, employees, designers, suppliers, and investors to care about. Long term sustainability is all about keeping things fresh and engaging. Like actors, brand is all about the experience. Is it thrilling? Are you likely to return in anticipation of another great experience? Will you evangelize it to your friends and neighbors?
Like it or not, brands need to reinvent themselves continuously, and those that do reap rich rewards. Take Macy’s Story (a topic we will discuss in an upcoming blog post) which the brand describes as a “reinvention of retail.” Macy’s executives realized they weren’t bringing in new customers -- an existential threat to any retailer. Story is all about promoting discovery by juxtaposing diverse products based on themes rather than category, and it has created a lot of buzz. The only way to experience Story is to walk through the doors of a Macy’s outlet, which is a pretty brilliant way to build a pool of customers who are new to the brand.
New Generations Need New Experiences
The Millennial and Gen Z generations are the future of shoppers. Unlike their parents, long-term wealth -- or even economic security -- isn’t a given. Saddled with college debt and facing high costs of living, these consumers are short on disposable income. They’re looking for products that are either super cheap or more ideally, will last a lifetime. On top of that, they’re worried about climate change and openly wonder if they’ll have a world to live in.
A lot of once-successful brands -- Victoria’s Secret, Abercrombie & Fitch come to mind -- are struggling because they failed to keep up with these critical, all-encompassing cultural trends. Meanwhile, other retailers, including the entire class of DTC brands, are successfully building companies that focus on these exact trends (themes that we will explore in over the next year in our about-to-be-launched blog).
After interviewing numerous brands on our show, nearly all of whom are doing their part to reinvent retail, I can tell you this: Every retailer has the ability to update their experiences in ways that cater to the emerging consumer. It’ll take some effort, but it’s not rocket science. Retailers can green up their stores or adopt the new principles of the Business Roundtable -- two strategies that are wholly in line with the new consumer’s values. They can create innovative experiences, a la Macy’s Story, or Entireworld’s collaboration with Design Within Reach. They can even do something really simple, like invite food trucks into the parking lots or host meet-and-greets with new designers in their stores.
What they can’t do is repeat the formulas of the 1990’s and expect it to impress consumers.
In late August, Phillip wrote about Target’s future-proof strategy, and the amazing bag of tricks the retailer deploys to keep its brand fresh and ever-changing. Compared to Barneys, Target is hardly the paragon of hip, and yet it has the keys to sustainability and doesn’t need to look for buyers to save its hide. Target is willing to jettison established store brands that are selling well in favor of new ones. Why? Because its executives understand that merchants cannot live by brand alone. Experience matters.