Hard Lessons (Thanks, Amazon) Breathe New Life Into Retail Stores
The New York Times
Malls are being hollowed out. Shops are closing by the thousands. Retailers are going bankrupt.
But it may be too early to declare the death of retail. Americans have started shopping more — in stores.
From the garden section at Walmart to the diamond counters at Tiffany & Company, old-school retailers are experiencing some of their best sales growth in years.
The strong revenues start with a roaring economy and an optimistic consumer. With more cash in their wallets from the tax cuts, Americans have been spending more.
The boom also reflects a broad reordering of the $3.5 trillion industry, with fewer retailers capturing more of the gains. Stores that have learned how to match the ease and instant gratification of e-commerce shopping are flourishing, while those that have failed to evolve are in bankruptcy or on the brink.
“The retailers that get it recognize that Amazon has forever changed consumer behavior,” said Barbara Kahn, a marketing professor and former director of the retailing center at the Wharton School. “I shouldn’t have to work to shop.”
Many successful stores are now a cross between a fast-food drive-through and a hotel concierge.
Target’s shoppers can order sunscreen or a Tokidoki Unicorno T-shirt on their phone, pull up to the parking lot and have the items brought to their car.
Nordstrom lets customers in some stores make returns by dropping their items into a box and walking out — no human interaction required.
Walmart is employing 25,000 “personal shoppers” to select and package groceries for curbside pickup.
In recent weeks, all three retailers reported stronger-than-expected sales growth for the quarter. Traffic to Target’s stores and online sites grew at its fastest pace since the company began keeping a record a decade ago.
Doomsayers have predicted that online shopping, led by Amazon, would one day conquer all of retail, rendering brick and mortar obsolete. As store closings set a record last year, no class of retailer was spared — with the carnage hitting Madison Avenue boutiques, shopping malls and big-box stores. In New York and elsewhere, many shops, big and small, continue to struggle.
But the pace of closings has slowed, as the most unprofitable stores have been culled and the weakest companies have collapsed. At this time in 2017, nearly 5,700 stores had shut across the United States, according to Coresight Research, a retail analysis and advisory firm. So far this year, about 4,480 have closed.
Some big retailers, like J. C. Penney and Sears, are still sputtering, despite closing lagging stores and sprucing up ones that remain open. But the stronger players are capitalizing on the industry’s failures. Target said it was picking up new toy customers in the wake of the Toys “R” Us liquidation this spring.
The rebound is feeding the broader economy. Hiring is up, with an average of roughly 50,000 retail jobs being added each month since February, according to the National Retail Federation.
Last year, a wave of retail layoffs fueled fears about the long-term health of a huge part of the job market. One in about every 10 American workers is in retail.
“There has been a shakeout, and 2017 was seen as the bottom,” said Melina Cordero, head of retail research for the Americas at the real estate firm CBRE.
Far from retrenching, many retailers are expanding their physical presence or spending billions to overhaul existing stores.
Dollar General plans to open 900 stores this year, as it deepens its reach into rural America with inexpensive food and clothing. The company is building a huge following in areas where there are fewer places to shop, particularly in the South and in parts of the Midwest.
At the other end of the spectrum, Tiffany said it was embarking on a three-year renovation of its flagship store on Fifth Avenue — the setting for the classic film “Breakfast at Tiffany’s” and a magnet for tourists.
The newly renovated flagship will probably include ...