Much has been written about the decline and the forecasted death of retail brick and mortar in this country. Additionally, a lot of time and effort has been spent on diagnosing why this is occurring. Everyone from strategists to economists to retailers has taken a stab at explaining the cause of this decline. To get at the real truth behind this seismic shift, you need to look no further than the driver of the decline, consumers themselves. The shifting patterns of who, what, when, where and how the U.S. consumer is or is not buying apparel cannot be blamed on new technology, new channels or new social platforms.
The shift in retail is driven solely by the dramatic shift on two fundamentally critical fronts.
First, the market make-up has been shifting and continues to shift from a fairly homogeneous composition of primarily baby boomers into a significantly splintered compilation consisting of Gen X, milliennials, Gen Z and the boomers. Multiple sub-segments exist within each of these large segments that have their own defining characteristics. This complex segmentation is compounded by the fact that the vast majority of retail platforms today have erroneously been founded and built on the strategic premise that large homogeneous groups of people generally desire the same things. The resulting conflict between retail’s strategic foundation and today’s consumer composition is like trying to put the proverbial “round peg in a square hole.” Simply put, most retail platforms today are not strategically or operationally set up to serve the splintered marketplace that they must serve in order to be successful.
Secondly, the basic needs and desires of this fragmented marketplace are drastically different from that of the homogeneous boomer generation. Boomers were broadly bucketed as an aspirational group attracted to anything that fed their perception that their next purchase would continue to make their lives better. With boomers there was always a “next” and a “new and improved” purchase positioned to further satisfy their aspirational desire. Nothing could be further from the truth with the succeeding generations. Beginning with Gen X, consumers faced the likelihood that their position in life would not be better than their parents’ generation. Instead of complaining about this economic reality, they adjusted their needs and desires toward things that would satisfy them in ways that conspicuous consumption could not do. Each of the following generations attacked this issue in different ways, but in general, they all focused on needs/desires that are different from those that were the foundation of boomers.
Millennials (with Gen Z following on their heels) are marketers’ desirable market du jour and well defined in terms of how their attitudes and values influence their consumer behavior. In general, they desire quality over quantity, favoring something unique or custom versus a multiple of sameness. They are highly tech enabled and use those tools not to simply shop but to become the most savvy, discerning and demanding consumers ever. As they have aged, they have moved from aspirational needs to a more self-confident “just for me” approach that favors authenticity and personalization. They are more knowledgeable, discerning and powerful than ever before, and they are using evolving technology to make their needs known. They are searching for the “best of the best” rather than the “most of the most.” They value authenticity, expertise, artisanry and a common social consciousness as “the ties that bind.” They are in search for brands and products that reflect their personal lifestyle/viewpoint rather than some manufactured and fictional aspiration. The emerging consumer is intensely loyal and fickle at the same time. They have a much shorter attention span having grown up in a “15 second world” in which things are “liked” or “edited” quickly. Finally, they have replaced the simple experience of shopping with the deep desire to have a valuable experience in each and every activity in which they take part. To that end, they compare and contrast the shopping experience with other available experiences and make decisions based on which one is more fulfilling.
Based on demographics and psychographics, it’s easy to see the major disconnect between existing retail strategies and tactics and the consumer segments that they so desperately need to attract. Retailers have resorted to ever increasing price promotion in a failed effort to attract consumers to the piles upon piles of merchandising sameness that they offer. Making those assortments available through mobile channels with next day delivery will not make the assortment more palatable to these consumer segments. All the new technology in the world will not make up for the lack of attractive brand stories, innovative product, compelling experiences and upgraded personalized service that these new consumers expect. If the foundational strategy of current retail stores does not shift to recognize the new consumer reality and the new set of needs/desires, their impending doom will be sealed.
Consumers are not bypassing current retail formats because these models are not technologically savvy enough. They are not bypassing them because the pricing is too high. They are not ignoring brick and mortar because they prefer to shop online. While these widely held theories are interesting, they fail to uncover the real issues of why the consumer base is dissatisfied with the traditional store assortment.
Consumers are staying away because the stores simply do not give them any compelling reasons to darken their doors. Customers get intrigued by fresh, relevant brand stories. They have a thirst for innovative products but will not dig through “piles on the aisles” in search of them. They are drawn to unique experiences, even for the most basic of products. They are looking to engage with personalized service that is at least as knowledgeable and savvy as they are. Retail needs to acknowledge that the consumer market has shifted from a mass market to a highly segmented and demanding market. Retailers’ basic business strategy must change in order to match up with the new consumer reality.
Driving sales results from the combination of understanding what motivates your customers matched with products that appeal to them. You only have to stand in the coffee section of a grocery store or on the racetrack of any department store to see the sea of selection that stands at the ready to satisfy your latest craving. This is especially true in the apparel category. More brands, more lifestyles, more products, fits and colors than the mind can absorb. All aimed at winning that all-important share of wallet. As the number of consumers and their respective spending has grown, the number of stores, brands, products and channels has also grown in a desperate attempt to supply that spending growth with options.
Stores and brands need to quickly understand that the old strategy of variety does not align at all with today’s consumer. They do not have the desire or the time to digest and dissect large pools of product. It calls for a more curated approach that highlights the best products for a given consumer and presents them in a compelling and way with rapid delivery. What brand/product is the store advising the consumer to “buy?”
Today, we have amazing technology that can crunch data and lead us to what the consumer actually is interested in. Data analytics is an amazing tool that can help solve this puzzle. However, there needs to be someone other than a number cruncher to use that information to match expected demand to the proper brand and product and then present it in a compelling way. This is the job of a true merchant who blends art and science.
In the end, consumers value themselves as individuals and want to be treated like the intelligent, discerning people that they are. They are willing to reward the stores, brands, products and channels that deliver authenticity, innovation and value with their purchasing dollars. They want to see the “best” on display in all accessible channels and mediums. They have little to no interest in digging through the mass to find the diamond in the mud. They will spend, and they will pay more, but they prefer a curated, more personal approach that makes them feel like individuals rather than a consuming herd.