Visit your favorite shopping mall – if you still have a favorite – and you can already see the seismic shift in retail taking place across the country. When was the last time you visited a Sports Authority, or RadioShack? What about bargain retailers like Payless Shoes, or kid-friendly stops like Gymboree?
Those brands are either completely out of business or hanging by a thread, and they’re not alone. I call them “the walking dead.” So many big-name, traditional retailers are struggling, because they either can’t or won’t adapt to the modern retail market. In fact, I see at least 20 more major retailers closing up shop in the next ten years if they don’t make major changes to the way they do business, and here’s my list:
10. Best Buy
11. Barnes and Noble
14. Banana Republic
18. Toys ‘R Us
19. Lord & Taylor
20. Abercrombie & Fitch
The first thing that should jump out about the list is that it features a little bit of everything. This isn’t about one specific sector of retail taking a hit – it’s about the entire idea of traditional retail being turned on its head. However, it’s not as if the eCommerce revolution is a recent development. These are all brands that have had the opportunity to adapt but have failed to do so for different reasons.
Let’s take the big-box stores like JCPenny, Sears, Kmart, and even Macy’s first. What can you buy in any of those locations that you can’t find conveniently online, and likely for a better price? But there’s an even bigger challenge. Even if those brands were to have an epiphany and decide to handle eCommerce integration the right way starting tomorrow, the Amazon effect is real. They’d have to compete with Amazon and countless other established online retailers that have been succeeding at the eCommerce thing for a long time. So, the big-box brands have to find a way to offer a better customer experience online, AND more importantly in their stores, but instead they mostly offer token eCommerce options, and vast cutbacks in service and options at the physical stores.
The Bigger They Are…
Many of the retailers on the list, including RadioShack, Rite-Aid, Best Buy, Lowe’s, Staples, and Dick’s are publicly traded companies. Short-term financing is often tied heavily to stock price, and there’s so much focus on how to band-aid issues to improve earnings for the next quarter that they completely lose sight of the bigger picture. It’s not easy to adapt to a changing retail marketplace, and the brands that do adapt have a long-term plan for eCommerce integration, coordinating omni-channel touch-points, and an understanding that the doorstep IS the new store shelf… with the patience to see it through.
Quite a few of the brands on the list have already started closing stores in large numbers, including Toys ‘R Us, Sears, JCPenny, Claire’s and Kmart. And the stores that don’t close are full of discounts, because selling your stuff for cheap is a classic knee-jerk reaction to losing business. Discounting is the ultimate band-aid, and plenty of brands have discounted themselves straight into oblivion. It’s a short-term plan to address a fundamental, long-term problem, and it simply doesn’t work.
For many of the brands on the list, these struggles have been a long time coming. Toys ‘R Us and RadioShack each barely survived recent bankruptcy filings, and there are more to come for other big-name retailers. It has taken years for eCommerce to flower, but most traditional brands simply assumed that it was all about price, instead of studying all of the other things that make online retailers like Amazon successful. In short, they ignored one of the biggest cardinal rules of business—differentiate or die… especially if your lack of differentiation adds no value.
There’s Still Time
A few of these brands may survive in some form, especially if they’re bought out by larger brands with a better grip on the realities of eCommerce, voice assisted shopping, and the fact that SIMPLICITY is the new EDLP! Make it easy for her… and she will buy it from you again and again and again. Frictionless fulfillment is the Retail of the future. Perhaps some will even adapt, put the customer experience first, and realize why they’ve really lost so much business in the first place. But for many others, the next decade will spell the end of a long run. It may not be easy to adapt, but plenty of brands have done it. The brands that don’t will continue to become footnotes to retail history.
I didn’t come up with this list to smugly point my finger and say, “I told you so.” It’s a bit sad to be witness to the end of an era. But it’s even sadder to know that with a little foresight, and less hubris, some of the failures we’ve already seen could have been prevented. I love it when companies develop a culture of innovation and excellence that revolves around paying close attention to the people most responsible for their success—their customers. I think there’s still time for some of our iconic brands to read the writing on the wall and make the kinds of changes that can make all the difference… but there must be a change in mindset and outlook..