Retail Is Not Dead But Stores Are Closing. How To Keep Your Store From Dying
By Bob Phibbs
On Monday, Ralph Lauren announced they are closing their flagship Polo store in New York City as part of a drive to gain their footing in a rapidly changing retail world. The Detroit News said it was “a symbol of old-fashioned luxury that no longer resonates with today’s shoppers.”
I don’t see their problem being the clothes or the luxury brands.
I mean...Haveyou shopped in a Ralph Lauren store lately?
The customer service level is anything but exceptional. And without exceptional service, exceptional merchandise sits.
Even Ralph Lauren’s.
It doesn’t matter how many other stores you have; closing some of them doesn’t make you great...
You can’t shrink your stores to greatness.
And Ralph Lauren isn’t the only brand closing a store. Credit Suisse estimates there could be more than 8600 store closings this year. Almost 60,000 retail jobs have been eliminated since January.
Yet at the same time this week, it was revealed that the three co-presidents of Nordstrom saw their compensation more than double last year, during a time when the company laid off hundreds of employees.
Have you shopped in a Nordstrom lately? I have.
Anything but exceptional. In fact, I wrote about it here.
What really surprised me after the post published was the call I received from the Executive ranks who told me I was right. They knew they had to fix the customer experience, but they felt they had to do it on their own.
If you could’ve fixed it yourself, you would have already.
But the retail world is on fire right now. And not in a good way...
Rue21 which has about 1,000 stores, is preparing to file for bankruptcy as soon as this month. A few years ago it was purchased by private equity for a billion dollars.
Other retailers, mired with piles of debt, can’t throw off enough cash to service their hedge fund owners’ debts.
Because of weak demand and falling traffic levels, bean counters have reduced budgets for workforce.
That means you get even less help on the salesfloor.
As malls lose tenants, those stores who remain worry if there is minimum viable level of stores to offset their higher rents.
At the same time, we’re hearing the future is online where no one needs or wants help.
We’re being told that all buying decisions can and will be made on our smartphones.
I’m old enough to remember the start of the Rust Belt, so-called because machines put to rest became rusty due to inaction, when American jobs moved offshore and the good paying jobs evaporated. Whole swaths of Pennsylvania, Ohio, and Michigan were decimated due to deindustrialization.
Those jobs never returned and the few that did used more automation and robots with a skeleton crew of workers.
Now we are in the throes of the great ghost malling of America.
During the time of the Dust Bowl, prior to the Great Depression and the Rust Belt, people were able to move to get jobs, but that isn’t going to happen this time.
Where will those who worked in retail go?
The retail shakeout will continue but it doesn’t have to be you.
Your brand, your mall, your store has got to have a branded service level that you will consistently over-deliver.
The only way to rebuild or fend off the chorus of retail closures is to proactively rebuild your business from the bottom up through the lens of the customer.
No, I don’t believe it is adding a kiosk on the floor, a robot that can play YouTube videos, or virtual reality headsets that you have to convince customers to strap on their heads.
All those shiny objects are simply not enough to move the needle of sales. And in reality, they’re just distractions. Albeit cool distractions.
Brick and mortar retail has one advantage most other businesses don’t that should make you hopeful: they can start over with the very next customer. The experience people have while shopping is more important to them than the actual products or luxury brands that you carry.
But I get it…
It’s hard work to manage authenticity in your staff.
It’s hard to get employees to open their hearts to another individual.
It’s hard to get customers to go beyond browsing… to trying on or considering something new...
But that’s the job.
Take ownership that your experience is average at best.
Understand your pride in your own customer service has come from your perspective which probably isn’t your customers’.
Realize your proud achievement of having employees who’ve been with you fifteen or twenty years could very well be your Achilles heel because they haven’t been forced to change – and neither have you.
I spoke at an industry gathering this week, and a tall well-groomed older gentleman came up to me at the close and said, “I haven’t had to manage my business for the past 27 years – it just runs itself.”
I replied, “Oh, so you didn’t agree with what I said this morning…” He interrupted me, “NO, I’ve been kidding myself. Thanks for kicking my butt. I now see we have to change.”
It is not a foregone conclusion your store, your brand, your mall has to close.
It could be far from it.
But it takes work.
It takes the hard work of hiring people who aren’t complacent.
It takes the hard work to manage those who feel their entitled position is safe because they’ve worked there so long.
It takes the hard work and methodical retail sales training of new employees on how to engage shoppers.
It takes the hard work and relentless focus on wowing a jaded public when they decide to make a trip to your store.
It takes the hard work of an energized workforce who understand their role and are up for the fight.
When you do that you get a story like this…
I was walking around downtown Los Angeles with a buddy yesterday and we stopped into artist Karen Bystedt’s pop-up store that featured her works showing Andy Warhol.
Within a few moments a nice young guy came up and welcomed us and then left us alone. After a few minutes he asked if we’d seen the artist before – neither of us had. He asked where we were from and my buddy shared New York. He had been at New York University when Warhol was alive.
The employee shared that Karen was going to NYU when she called up Warhol’s office on a whim. He answered and she asked if she could photograph him as a model.
He was intrigued, and she did a photo shoot of him. Twenty years later she found the photos and created her own art from them.
The artwork ran $10-20K, and while it was very LA, it was not something I was ready to purchase. We were preparing to leave when the employee introduced himself by name as Mark and pointed to a display case.
“These are wallets Karen made as limited edition of one-of-a-kinds. They only run $40 and once they’re gone, they’re gone.” We each purchased one.
Imagine how many times this young guy did that in a day!
That’s how you compete.
One person at a time finding some way to engage a stranger.
And beyond that to make the sale.
Contrast that to the timid souls running other galleries or designer boutiques.
Forget they don't know anything about closing a sale; most can’t even start a conversation!
Why does so much of retail’s customer experience go off the rails at Nordstrom? At Ralph Lauren?
Because these brands still think we come into a store looking for a particular item. Most of the time, we don’t.
We come into a store for a variety of reasons, only are few are even conscious to us.
When you allow your employees to hang on racks – Nordstrom; or hang behind counters on their smartphones – Ralph Lauren – you aren’t minding the store.
Store associates know when a business is in trouble. They see lower demand. They hear about locations closing.
A New York Times article had a cynical quote from Simeon Siegel, from Nomura, “There is a self-help mentality now. People walk around with their phones in their hand to tell them the best model and the best price. You don’t need as many people walking around trying to convince you to buy a sweater.”
I don’t agree.
When someone does go to your physical store, it is a sign they are coming to buy.
They took time out of their day to go to your shop. The shopper hoped for something other than a mobile experience.
How else do you explain it?
If they truly loved no interaction, they wouldn’t be there.
If you believe my world-view, then I have to ask you…why don’t you train your employees accordingly?
Look there’s no magic bullet out there to save you from the Borg of retail right now - that everyone will be assimilated and resistance is futile. It will be a series of small steps.
If you’re a major brand like Ralph Lauren or Nordstrom, you should call me and rebuild your customer service experience. You can’t just believe your own PR that you’re the best example of premium service.
Even a stopped clock shows the right time twice a day, but in the end, it is still broken.
We’re in a seismic shift in shopping. Do what you can and have a laser focus on your customer in a human way.
Remember, you can’t close your doors to become successful.
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