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 Christmas 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 Millennials moving?)
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 (e.g. 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. E-commerce sites usually make better recommendations than shop assistants and artificial intelligence is playing a key role improving customized marketing . The logical consequence is Retail’s Apocalypse. As Darwin said, the most adaptable species will survive. It’s time (maybe too late) to invest in CAPEX (renew the building, signs, display, add digital capabilities) 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 / inventory online and give a great customer experience!).
I understand why Primark (fashion/”grocery” retailer) displays clothes like a supermarket displays bananas (business model based in volume), but Department Stores 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 grocery store. 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 through department stores. Mango, the Spanish fashion retailer, has failed twice entering the US market for example. 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 commodity (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 (e.g. food, electronics, apparel, etc). But, does it make sense to have such a bad experience when Amazon or other online sites offer the same convenience? The only way to compete to Amazon and online is EXPERIENCE.
I also recommend you an article from Chain Store Age (CSA) “Malls will become consumer experience spaces” by Al Urbanski.