Another one bites the dust. As I read on about the latest retailer Chapter 11, this time Aerosoles, I note the usual reasons cited: declining mall traffic, industry-wide markdowns and, of course, the shift to online shopping. We’ve heard it countless times already – “Oh, Amazon is taking our shoppers,” “No one shops in a store anymore,” “shoppers won’t pay regular price” and so on.
Like a pair of Aerosoles, I’m simply not buying it.
In the move to an experience economy and omnichannel universe, retailers seem to have forgotten the fundamental, and that is the product. Look at a smattering of the major closures and bankruptcies that have occurred this year: JC Penney, Bebe, Macy’s, Sears, Radio Shack, Payless, Ralph Lauren, BCBG, Crocs (shudder), Gander Mountain, Chicos, The Children’s Place and the list goes on. While reviewing the list, I couldn’t help but think the reason I don’t visit those stores is that none of them have special, unique products that appeal to me. Most of things in Macy’s I find at any department store, I’d rather dress my (not yet in existence) baby in hand-me-downs than spend cash on an outfit that will fit her (or him, I suppose) for one week, and Crocs – well, they perhaps get a lifetime achievement award for riding that gravy train as long as they were able. And, while it seems like a lesson for brick-and-mortar retailers, a singular truth affects product in every channel:
Consumers are only buying a brand’s greatest hits, not their whole album!
Physical products are feeling the same disruption the music industry went through when services like iTunes came into the mix. Generally, music albums have three or four great songs, if that. With the advent of iTunes, the music industry suddenly experienced a shift from $15.00 album sales to $0.99 singles sales – given three or four great songs on album, that $3-4 dollars in total revenue instead of $15.
Now, instead of the rise of an entire brand, it’s the individual products themselves that consumers go crazy for. It’s Kylie’s Lip Kits, H&M’s collaboration with Erdem (or Beyonce, Kenzo, etc.) the Third Love bra, etc. Shoppers no longer buy an entire collection because whole collections just aren’t special enough, and someone is probably doing another part of that collection better anyway.
Consumers are being fed information 24/7 – we live online now. So, products should match what is important to shoppers in their lives. Brands like adidas have managed to stay relevant design-wise by collaborating with influencers and other brands consumers find currently significant. The products tend to be limited edition, and then the brand moves on to the next relevant person or brand. If adidas relied only on its classic styles, the company might have suffered much like Nike is now. As a woman, however, Nike’s products seem to be missing the mark, while Puma, meanwhile, is raking up the dough with Fenty.
Not All Scarcity Is, or Was, Created Equal
This principle of scarcity is not new, but needs to be dissected. Every now and then, and especially around the holidays, different beauty brands release “limited edition” versions of their products, maybe with holiday décor or some other special packaging. From my time working at Sephora, those products rarely flew off the shelves. Now, contrast that with Pat McGrath’s limited-edition eyeshadows, packaged in an envelope full of sequins – within weeks, it was nearly impossible to find.
Consumers are smart, and they understand that they can still get that Shu Uemura face wash at any time, even if it doesn’t have holiday bows on it. But that special eye shadow formulation with unique packaging – not so much.
There are a lot of brands out there, each with their own assortment of product. Social media has made it even easier for smaller brands to get a share of shoppers’ attentions and wallets. We are seeing over-assorted and underwhelming retailers unable to compete with the assortment of new, amazing products out there and they are hurting. My guess is we will see many more names added to the list, with consumers asking “oh yeah, I know them, what did they sell again?”
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