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Regina Connell: “The solution for big retail lies in thinking small.”

SAN FRANCISCO — If you think luxury retailers are immune to the struggles of their middle market peers — Macy’s, Ann Taylor, Gap, Abercrombie, The Limited, American Eagle, Wet Seal — then consider this: Neiman Marcus has nixed its IPO, Saks is struggling (despite a major overhaul of its stores), and even Tiffany is on the downswing.

We’ve entered the dark age of retail. Yes, consumer behaviors are shifting, and e-commerce has brought on much anxiety. But a great deal of the damage has been self-inflicted:

  • Lack of purpose: So many retailers don’t seem know who they are, or WHY they are. Instead, they chase the latest trend or market, losing the essence of their brand along the way.
  • Playing it safe: They insist on selling merchandise that’s uninspired, undistinguished, undifferentiated.
  • Standardization: Retail chains persist in rolling out soulless, cookie cutter stores. You don’t know if you’re in Albuquerque, Atlanta, or Amsterdam, though it’s often rationalized in the name of efficiency and brand integrity. Yes, both are important, but at the expense of boring customers? That’s self-sabotage.
  • Dependence on discounting: When 75% of the store is the sales rack, you have a problem. Discounting is a drug — and like any narcotic, it has severe withdrawal symptoms.
  • Skimping on customer service: They skimp on staff training and nurturing, resulting in a team of unhelpful, unmotivated staff that’s often more interested in Snapchat than proper customer service.

Industry analysts have argued that it’s experiences that we all want, not things. There’s some truth to that. But does it really make sense to have brands (high and low) clear out valuable retail space for trunk shows, local maker pop-ups, DJs, massage services, and whatever else, just to stay on trend? No. And certainly not if they continue selling uninspired (and in some cases, shoddy) products.

The bottom line: the solution for big retail lies in thinking small. This requires a different way of thinking about, operating, and approaching retail. The mission is to get consumers engaged again.

A couple of suggestions for big retailers:

1. Know, and live, your brand.

Most chains have faltered because they lack identity. For many of them, the idea — the essence — that connects merchandise, store design, and marketing, seems to have never been there, or has been eroded completely. Consumers lose faith. Investors quickly follow.

Naturally, it’s easier as an emerging brand, a small one, or one that sells DTC. It’s no surprise that specialty, single-brand, and concept stores (think: L’Eclaireur, Dover Street Market, Collette, Apple, and Warby Parker) do this particularly well. The challenge for larger retailers is to apply these concepts to their own operations: Regain the energy, purpose, and laser-like focus of the brand.

2. Reimagine what a store can be.

The primary functions of a store are: brand expression, service, and marketing. Sales is its secondary function. Embrace the idea of showroom (not salesroom), of flexibility (not fixed spaces). Fulfillment happens in-store or online. It shouldn’t matter. For that reason, embrace the principles of concept and hybrid spaces that emphasize mood and messaging, not just inventory.

3. Loosen up.

Standardized stores must die. A store in Albuquerque SHOULD look different from the one in Amsterdam. Embrace terroir and place. Maintain or develop local brands, and give merchandising and store design a local touch. This may not be efficient, and merchandisers will hate it. But keeping things relevant and connected to place adds life, a reason to buy (particularly for tourists), and better long term optics.

The Macy’s strategy of acquiring venerable, beloved local brands like Marshall Field, just to close them or to rebrand them as Macy’s, sowed the seeds of the chain’s woes. This makes some sense on paper, of course — it’s about efficiency of supply chain, merchandising, promotion, brand, and the notion that consumers love to shop from brands they trust and are familiar with. But it doesn’t take into account the power of place and the need for these retail hubs to be about community — not just consumerism.

The irony about cultivating a strong brand identity is that it lends a bit of elasticity. A wonderful example of this is Aesop, who — confident in who it is — has a different look to each store, designed by different architects and from local materials.

4. Embrace scarcity and surprise.

Ubiquity is a cyanide pill for the luxury space — and also increasingly for more mainstream categories as well. So how do you create scarcity?

Get scrappy. Do what emerging brands are doing: fewer, and smaller, stores; shorter runs on merchandise; limited editions; mobile retail; unlikely markets; showing up in other people’s stores; pop-ups that are smartly designed. With scarcity, however, comes responsibility: You have to create an impression when you do appear. But then, leverage all the resources that come with a bigger enterprise: high quality design; higher levels of service; including customized service; omnichannel; and deeper inventory.

5. Treat your merchandise — and customers — with respect.

Choose better quality, choose less, and stop discounting. Differentiate. Don’t buy the trend. Don’t BE the trend. No mass buys. No mass sales.

6 Learn to let go.

Not every retail brand needs to be around forever. Some brands (Hot Topic, for example) are so rooted by a zeitgeist or trend that it doesn’t make sense for them to continue. Some brands have naturally limited equity. Don’t keep stretching them, or adding spin-offs just to chase markets. Let brands die before they get picked off. Create even better new ones. Then let them die too.

Final thought:

As big retail begins to reinvent itself by acting smaller, here’s a provocative question: What if your showroom idea were so great that you could charge people just to get in? What would that mean?

In theory, you could lower your prices because people are paying directly for the retail experience — something that can’t be replicated online. As an example, I recently went to an art fair where the cover charge was $35. No freebies, no discounts. But I gladly paid the fee knowing that I’d see things I wouldn’t see elsewhere, that I’d meet interesting people, and that I’d be a part of an event.

This requires a complete rethink of retail culture. The central office command center model is no longer effective. Instead, it now requires creativity, smarts, and flexibility — in the field, at the actual market level. And that means people.

Is that kind of talent out there? Sure. It’s just probably not within the ranks of the traditional retail sector.

Lean Luxe subscriber Regina Connell is the Communications Director at Heath Ceramics, San Francisco-based homewares and furniture company. The views reflected here are those of the author and do not necessarily reflect the views of Lean Luxe.

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