The Bird´s Cage Strategy is over. Millennials are running away from Department Stores.
A day in the life of a Millennial visiting a Department Store
Last week, I had (and say HAD/must) to visit a department store in Barcelona because I needed to change a Xmast gift. Department store´s business model is explained in many business schools but you just need to read the date of the case to understand that it was successful some time ago. Anyway, this post is not about the past, but the present.
Why is there a lack of excitement when Millennials visit Department Stores?
During my “trip” to the Department Store (DS), I spent more than 30 minutes to park my car because there is only one entrance in their parking lot. Then, inside the “anthill”, I took the old automatic escalators that brings you easily to the upper floors. The problem is when you want to walk down… you get lost, going around in circles, feeling inside a labyrinth. It´s a bird´s cage!
El Corte Inglés (where´s Waldo, where are the Millennials?)
I arrived on the third floor, Men´s apparel, and I searched for the corresponding shop-in-shop in order to change the size of a casual shirt. After a while, I found the corner but any shop assistant was nearby. It´s hard to find them surrounded by such amount of product, closets, and sale signs. Finally, I found a salesperson next to the cash register. Many people were queuing there and so did I to receive assistance (Again, a waste of time and patience). I didn´t feel any reason to linger.
Five minutes later, a man of around 60 years old, wearing an old, grey suit, with his name on a badge tried to help me. He was stressed and didn´t know about the brand itself. He accumulated shirts of my size without any consistency and not asking me what I was looking for (occasion, style, color, fit…). After taking a couple of shirts, I got into the fitting room, a dirty and old-fashioned place without mirror. I just wanted to pay and leave as soon as possible.
Department Stores are a waste of time, compared to shopping online. Even some websites make better recomendations than shop assistants. The logical consequence is retail´s Apocalypse. As Darwin said, the most adaptable will survive. It´s time (maybe too late) to invest in CAPEX (renew the building, signs, display, add digital…) and OPEX (train/ update sales assistants). Companies should think and work because of the customers and not the investors. Many deparments stores didn´t invest in improvements and renew their stores because of short-term investors obligations or short-term strategy. New generations like shopping offline, or at least, offline is part of their shopping experience. The key is filling the needs of the omnichannel customer in every contact point. Offline should cover the experience: taste, touch, sight… emotions.
New generations don´t have the same shopping habits than older generations
Department stores are struggling to get what the customer journey means. Millennials are spending less in products and more in experiences but some analysts are still surprised that many retailers are closing stores worldwide.
Today, it´s about quality and experience, not quantity (Put your stock online and give a great customer experience!).
I understand that Primark (fashion/”grocery” retailer) displays clothes like a supermarket displays bananas (business model based in volume), but DS have to rethink their space because their value proposition is, many times, out-of-date. Department stores value proposition is to cover “all” customer´s needs in the same place. Most of the department stores don´t even have windows to look outside!
A department store that sells brands such as Ralph Lauren, Ermenegildo Zegna or Armani, amongst others, shouldn´t display stocks like fruit in a street market. Fashion retailers should rethink their expansion strategy in order to take the lead and define a consistent story telling, the omnichannel approach to their customers. Some of them have failed entering in a new market thru department stores. Mango, the spanish fashion retailer, has failed twice entering the US market. The latest attempt with JC Penney supposed the closure of more than 450 shop-in-shops.
It´s experience instead of merchandise. Today, Offline fills the top of Maslow´s hierarchy of needs and Online the Bottom. Therefore, bricks shouldn´t play the game of selling fashion as a comodity (same for other categories).
Some people (more older than younger) like department stores because they are used to go there. Because they can finance their sales. Because they have a loyalty card that gives special discount. Because you can make a gift and change or return it easily. Because it´s practical/ functional to have everything in the same place (food, electronics, apparel, etc). But, does it make sense to have such a bad experience when Amazon or other online sites offer the same funcionality? The only way to compete to Amazon and online is EXPERIENCE.
Millennials understand the online channel as something functional (to compare products, get the best information, compare prices…) but still love stores. But product is not a hook, it´s the customer service, the display, the music… Product, as the icon of bricks, should be transformed into a piece of the story in brand´s ecosystem.
These are some brands that I visited in NY and are outstanding in terms of customer experience:
ABC CARPET & HOME (FLATIRON)
ADIDAS (MIDTOWN EAST)
BARNEYS NEW YORK
MACY´S (HERALD SQUARE)
POLO RALPH LAUREN (MIDTOWN EAST)
REBECCA MINKOFF (SOHO)
THE NORTH FACE (MIDTOWN)
I also recommend you an article from Chain Store Age (CSA) “Malls will become consumer experience spaces” by Al Urbanski.
Some quotes: The mall of the future will have more in common with Disneyland than Roosevelt Field, according to a study prescribing that retail real estate must be in the business of helping people accumulate experiences, not merchandise.
“The key is to control the shopper’s journey and direct the consumer to the proper place, and malls will transition from anchors to attractions,” said A.T. Kearney partner Michael Brown, a co-author of “The Future of Shopping Centers” study.