Sears stood still during the retail revolution. Here's what other brands can do differently
CNN/Stylemagazine.com Newswire | 10/23/2018, 1:25 p.m.
By Alan Treadgold for CNN Business Perspectives
(CNN) -- The bankruptcy of Sears, following the collapse of Toys 'R' Us and Brookstone, is a reminder retail is in only the early stages of a major disruption. Many thousands of storefronts will close, and more iconic names will end up in bankruptcy.
To survive in today's cutthroat environment, brick-and-mortar retailers must evolve constantly and many will need to radically change.
More than the "Amazon effect" is at work. Yes, retailers are facing competition from shopping websites. But, increasingly, they are going head to head with their own suppliers who, for decades, had relied upon stores as their primary sales channels. Not anymore.
The vast majority of consumer goods companies around the globe — 88%, according to a new PA Consulting survey of the top 150 firms — expect their direct sales to consumers to increase over the next two years. Every one of these companies reported that it is in the process of either strengthening or developing its direct-to-consumer offerings in order to build tighter relationships with shoppers and have more control of how their brands are presented. To achieve this, many are now adding an online shopping capability as well as putting more emphasis on the brick-and-mortar storefronts that they already operate.
What's required for retailers to compete in this rapidly changing market is to rethink the very concept of a store. No longer is a brick-and-mortar location merely a place to ring up sales — Sears' downfall is a very stark reminder of this. As shoppers who have grown up in a mobile world enter their prime purchasing years, stores need to cement brand loyalty by creating in-person experiences — part entertainment, part education, part traditional retail. By strengthening the bond with customers, retail outlets can drive sales both in person and online. But it takes a truly customer-centric mindset, an appetite and ability to innovate constantly, and often the willingness to make major investments in new customer experiences.
American retailers can look to UK department store Selfridges & Co, and Swedish retailer H&M for inspiration. Selfridges sees its central London department store as much as a stage on which to present new performances as a conventional retailing outlet. The store hosts a variety of promotional events. Last week, there were artwork installations exploring "brand deities" in the store as part of an ongoing partnership with a well-known sculpture park. Earlier this month, window installations encouraged passers-by to "see the world differently."
All of these displays are designed to keep the customer entertained and wanting to come back to see what's new and exciting. Does it work? Well, at a time when department stores around the world are under such extreme pressure, Selfridges' latest fiscal year sales are up 11.5%, and operating profit is a record for the fifth year running. Of course, this isn't all due to funky window displays. Rather, it shows what is possible when a retailer strives to bring new experiences to the shopper.