Retail Hasn’t Changed In 100 Years — And What That Means For 2017
The golden age of the major department stores knew they were in the business of providing convenience, says retail veteran Ryan Craver. Along that way, that’s been forgotten, but so-called omnichannel strategies are serving as a reminder.
It’s fairly easy to define shoppers’ expectations these days: when they find a specific product, they want to get it as cheaply and quickly as possible.
Come to think of it, that’s always been consumers’ most general goal. And as distribution of goods became more efficient in the late 1800s, the modern consumer culture was born. The major retail chains, from Macy’s to Woolworth’s spread across the country a result.
As store brands keep a watchful eye on Amazon — particularly its latest encroachment into brick-and-mortar territory with the experiment of the no-checkout line Amazon Go market — alongside mobile payment and drone delivery, Ryan Craver, SVP Emerging Brands, Licenses & Digital Strategy at Lamour Group and President/CEO of its Trimfit apparel unit, notes that the despite the digital tools and gimmicks, not much has changed.
“Look back at the 1920’s — Sears had our version of the endless scroll that Amazon has today in the form of an all-encompassing catalogue that arrived in consumers’ physical mailboxes,” Craver says. “You flash into 1960’s. You start seeing pages in the catalogue saying, ‘Call this 1-800 number line. We will have it delivered to your desired store tomorrow.’ That sounds a lot like what we associate with Amazon’s promise of fulfillment immediacy today. It’s an older version of ‘buy online, pick up in store.’”
Craver, who has held executive posts at Lord & Taylor and its parent Hudson’s Bay, will be speaking on the historical frame of current retail strategies at The NRF’s Big Show SuperSaturday featuring over 120 retailers later this month.
“In the ‘50s, proximity to a train depot, which would allow you to get anything within a Sears catalogue, was within five square miles of every household in the United State of America,” Craver continues. “That’s similar to the size of the footprint that Amazon has today via delivery truck. The whole premise is that nothing’s really changed. Customer expectations have remained the same, the delivery vehicles to meet those expectations are the element of change. And it’s all about the convenience factor: getting what you want in a timely fashion wherever you are. Consumers have embraced the idea of frictionless commerce, which I like to call ‘thoughtless commerce’ — the point being, you don’t need to think, or make anything but the most minimal effort between shopping, paying, and receiving your purchase.”
GeoMarketing: The retail industry is always focused on “the next big thing,” whether it’s augmented reality, virtual reality, contactless mobile pay, buy online/in-store pickup. How much of this is gimmickry? How much of it is a continuation, as you suggest, of the retail process by other means?
If we take ourselves back two years, you and I were probably across the table from each other talking about AR and VR. VR has still not even left the gaming stage. Yes, you have Oculus. You’ve got Samsung playing around with Samsung Gear. We have yet to see a compelling use case.
I still remain optimistic and excited about AR. Augmented Reality uses your device’s camera to overlay or project products as if in the real world. Sounds a bit sci-fi but incredibly compelling when pulled off. We’ve seen a little glimpse of use cases with brands like Lowe’s and Home Depot and in the way in which Ikea uses AR to let users place a piece of furniture in their home. We’re going to see more extensions of that. For example, if I was a major clothing retailer, I would include AR in my store’s app that would allow users to virtually try on clothing by letting users take an image that scans their body. One example of that is an app called Zeekit. A compelling use case for any clothing retailer.
What excites you about retail-focused tech right now?
Mobile payment is quietly making waves. Everyone makes fun of Apple Pay, Samsung Pay, Android Pay, etc. But you know what? These platforms are seeing a lot of transactions and significantly improve the buying process. E-commerce transactions provide pre-populated addresses and payment information. Do you enjoy typing in your shipping information into a mobile phone? Apple’s Safari web browser now has a payment extension that lets MacBook Pro users literally buy a product with a fingertip swipe. Adoption in stores is definitely on the upswing and I see nothing but opportunity to gain share slowly but surely. It will be a long road of incremental gain.
You were fairly pessimistic in October about the state of retail going into the holiday season. What’s the state of retail as 2017 begins?
I still believe we as an industry are due a tremendous amount of healthy grooming over the next decade. The top two areas in which customers continue to decrease their spend? Food and clothing. Fast fashion, outlets and internet transparency have all led the customer to spend less on clothing. If you look at the department stores over the last 20 years, they’ve been in a considerable downward trend. Nothing that I’ve seen in the way in which the department stores do business has changed.
In clothing specifically, we know that customers are spending much less of their wallet. Resetting selling floors two- to four times a year isn’t flexible enough to adjust to uncontrollable forces like weather, shifts in fashion or the thousands of pricing updates that happen on .coms each and every hour.
Stores over the last few years have seen temporary relief in positive online sales to offset store declines, but growth in online is become harder. The sales plateau is there for many as law of larger numbers has set in and cost to buy traffic has increased.
The Macy’s of the world that come out and say proactively it’s going to close 100 stores. I applaud their efforts but I believe more is coming. Majors that went lean in Q3 and opened up the floodgates in Q4 will need a reality check.
Ultimately, this past holiday season will be a true wake up call for a lot of retailers. We’re going to have some considerable negative news on Wall Street related to the publicly traded retailers. With all that said, this is healthy and needed for the industry. We need a course correct.
Given all the changes in the industry, how have Lamour and Trimfit been evolving?
What I wanted to make sure we did with Lamour was start to collect a number of brands in three ways to build our own fly wheel.
The first component involves licensing and making product for brand labels and paying royalties based on that. The second component is to outright buy brands, which is something we were already doing. The third component, is to manufacture private labels for various labels.
If you’ve got all three of those going in some way, you can hit every single retailer in the country or potentially in the world, both in-store and online.
For example, if I’m headed to Seattle to meet with Amazon. I meet with the buyer that is in charge of all of women’s underwear. I can say, “We’ve got a license for this brand. We own this set of brands. Or lastly, we could make your private label. Which bucket do you want? One or all three?” That flexibility helps us cover all the bases and is what keeps us successful.
We have licensing deals with New Balance and Skechers. Those licenses round out the brands we own Trimfit, Terramar, HOTOTTIES and private label for brands like Joe Fresh.
Once the brands we license approve a line we’ve created, then we go sell the line for them. We go back to all of our factories. Manufacture the best quality product and then fulfill against those sales. We have retailers like Bloomindale’s that buys New Balance wholesale from us or an Amazon where we list New Balance Ladies on their site and fulfill it ourselves direct to the consumer.
Speaking of Amazon, what do you think of Amazon Go and what impact do you think that will have on retail?
Look at the way that Amazon has always launched its offerings. Drones were launched on 60 Minutes in an interview with Jeff Bezos. It generated a huge splash. Their earnings releases only talk about what they’ve sold related to Alexa, Echo, Dot, and how many orders they’ve fulfilled. It’s all the headlines.
History comes at a price that Amazon is not willing to pay — or needs to.
They don’t have all that legacy infrastructure and cost. Amazon starts brand new small format stores regardless of what they put in them. They’re a lower cost-base. They don’t have all that legacy burden that major retailers do and have the flywheel to fund bets.
Everything Amazon does all comes back to the idea of “thoughtless commerce” I mentioned earlier. It’s about the convenience factor.
If you watch Amazon from outside looking in, they don’t know whether Amazon Prime, Amazon Pantry, Amazon Fresh, or Amazon Go is the best scenario. What they do know is that the lion’s share of your wallet and my wallet every week goes to groceries. Ultimately, this is all healthy for the industry. It’s going to put us in a much better position.
For Lamour, we understand that providing a product that’s of high quality, at the right price point, in the right retail establishment or e-tailers means that we can be successful. We’re experiencing the biggest wave of market share shift retail has seen in a long, long time. Looking to 2017 and beyond, it’s incredibly exciting time to be in this business.