Opinion

At a Tipping Point

We are living in probably the most interesting and exciting times for the retail industry as a whole. I believe that we are at a tipping point. You only have to look at the two most successful fashion brands today: H&M and Inditex Group.

By Chris Igwe

Chris Igwe, President of Chris Igwe International. Image: Igwe International

Their geographical coverage is widening, they’re growing more brands and concepts, and they continue to do what they do best: consistently provide great fashion to their customers around the globe.

They seem to have kept things very simple—successfully! And yet, we know that mass-market fashion is being squeezed: declining sales and profitability, lack of products consistent with customers’ expectations, too much price competition, and simply not enough effort being made to provide a true or lasting customer experience and satisfaction.

So, what do disenfranchised customers do? The next best thing is either to shop elsewhere, online, or both. This means that we will see more casualties in the mid- or mass-market fashion world in the years to come and, based on what I am seeing and hearing, 2018/2019 will be a critical year for many.

The problem is that denial is not an option, it simply delays the inevitable—store closures and/or store portfolio optimization. Essentially, what US retailers and brands have been doing over the past few years (closing stores) will happen in Europe, with significant store reductions and market exits.

This brings us to the online conversation. Is it the panacea? Definitely not, which is undoubtedly a good thing. I still hear retailers saying that they are “testing” their online strategies to see which ones work best.

While this may be a good thing, some of these retailers are ones I spoke to 10 years ago, when online was a twinkle in their eye. At that rate of decision making, they will be extinct before they get a plan off the ground!

What would I like to see? We could speak about food and beverage or leisure, but I believe there is a place for independent and small retailers. They are the true entrepreneurs—they have an idea, a product, a service offer, which excites, creates an interest or emotional connection, and is founded on sound ethical principles of offering real customer service.

The reality, however, is that not many such entrepreneurs can afford the rental levels required of certain high streets or shopping centers. It is therefore encouraging to see certain major owners of shopping centers being sensitive to this and embracing these types of tenants.

I hope that it will become a growing trend, as it not only provides the differentiation so badly needed in our shopping centers and high streets, but also brings customers back and restores faith in what the physical space can provide. One obvious way to develop this, at limited risk to both the tenant and the landlord, is the route of pop-up stores.

I believe this will become an integral part of the merchandise mix of shopping centrer going forward. The model has been tried and tested and works and it is becoming more professional. Once again, the economic model has to make sense for all parties, but most of all for the brand or concept.

There is so much noise in our industry, we need to stop and listen to what we are actually hearing and seeing. We must stop over-complicating things and go back to doing a few things incredibly well instead of trying to do everything, all the time, and, too often, badly.

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