CBTL in Korea. Photo credit: Gensler
Over the past year Kathleen Jordan, a principal in Gensler’s New York office and leader in the firm’s Retail practice, undertook an investigation into the future of the department store. Her premise was simple: for years she’s been hearing and reading about the upcoming death of the department store, but so far it hasn’t happened. To learn more, she spoke with industry leaders, visited successful examples around the world, and read a lot of articles. The result is a set of distinct advantages she sees for department stores in today’s business and retail climate, and a set of bold strategies to regain the competitive advantages these stores once held. This is the second post in a six part blog series that conveys her findings.
Department stores have unprecedented power to select and curate their selection of products, demand exclusives from designers, and drive the creation of new products. Stores like Macy’s, Target, and H&M are leveraging this power to create unique offerings and experiences.
Vinyl Nation Display at Walt Disney World shop in Orlando, Florida. Photo credit: Kathleen JordanCreate unexpected synergies
It all starts with the product. Steve Jobs gave inspirational credit to Henry Ford by reiterating his quote “If I had asked people what they wanted, they would have said faster horses.” The dare to be great opportunity is providing merchandise and experiences that the customer doesn’t realize he or she wants, but upon seeing it, must have it. This means pushing product and lifestyle synergies that deliver value and something unexpected. We’re not just talking bags next to dresses—go further. With their tremendous purchasing power, department stores have the power to force brand collaborations and product development to create new markets and needs. The one thing you can’t do is play it safe, but that’s what a lot of stores are doing—that’s why you walk from store to store and all you see is the same products over and over again.
The recently-announced collaboration between Target and Neiman Marcus is one example in which an unexpected (and unprecedented) partnership between a luxury and a mass-market retailer is creating a huge buzz in the industry. This partnership maximizes the strengths of both retailers: strong designer relationships and a trend rooted merchant team coupled with mass production manufacturing capabilities with high levels of quality control. What this partnership recognizes is the high-low shopping habits of today’s consumer, which manifests in two ways:
- the woman who shops Neiman Marcus for her own wardrobe also shops Target for children’s clothes and dog supplies, and
- she has no problem pairing $90 Banana Republic pants and a $40 blouse from Uniqlo with a $500 pair of Jimmy Choo shoes, and a $1,500 Michael Kors bag.
It was pure genius. I can’t wait until its debut on December 1.Ask the customers what they want
Merchants must get to know their customers. For national retailers, buying should be approached on a regional basis. Macy’s developed the “MyMacy’s” program at the onset of the recession, empowering the regional DMM’s to skew the buy to the preferences of the local market. This is becoming easier and easier to do. Merchants can directly interface with their customer base-at-large utilizing social media—Facebook, Twitter, Pinterest, Tumblr—to gain better insight into what they want and expect. In 2011, designer Derek Lam introduced the first-ever “crowd-sourced collection” available for purchase on eBay. The brilliance of his experiment lay not only in tapping the public to create the final offering, but holding the launch party at his full line store to expose a new demographic to his high-end line. Walmart has followed suit, developing “Get on the Shelf,” a program utilizes crowd sourcing to let buyers know what products are in demand and what products are always in short supply. These are the DMM’s that the retailer never realized they had. Social networking is an amazing opportunity to build a two-way conversation with your customer base. As social etiquette dictates, listening is an essential component of a meaningful dialogue. Social media engagement should subscribe to the same rules.
Many retailers currently approach social media as an add-on: building community, offering fashion and product advice, etc. And while that’s a good start, they can go a step further. The ability to direct the buy or create product by actually tapping into your audience is huge. And product offering isn’t the only opportunity—social media is an opportunity for direct-from-customer feedback on anything from customer service to the design and functionality of your store. Ask them, and believe me you will get more information than you were looking for. People are yearning to be heard, to be a part of the brand community. This kind of conversational engagement may lead to new styles, new price points, or a whole new focus. Asking people what they want, and then providing it, will go a long way to generate customer loyalty, and frankly, is now expected. The lasting impression will be “They listen to me. They care about me.”
Tootsie's in Houston, Texas. Photo credit: GenslerProduct Exclusives and Private Labels
Buying power must be brought to bear to create product exclusives. Every retailer knows that limited time only and limited edition product runs can cause a buying frenzy. Saks regularly demands exclusives from its cadre of vendors, and Macy’s has had great success with limited run collections with the likes of Karl Lagerfeld and Doo-Ri Chung. Macy’s also stretched this to a special event highlighting Brazil, reminiscent of the Neiman Marcus and Bloomingdales country-inspired events in the 80s and early 90s.
Private labels are also an opportunity to respond to customer needs while creating new products and exclusives. Lord & Taylor created the private label Black Brown 1826 in partnership with Joseph Abboud and the line has been so successful that Lord & Taylor/HBC have begun wholesaling the line to other department stores, such as Belks. This is the retailer’s opportunity to establish credibility with regard to trends and fashion. The retailer must be careful to provide a balance of relevant private labels that enhance the overall store offering, while not alienating critical vendor partnerships. Key to this is the understanding of the high-low shopping habits of consumers, and allowing for pairings with other brands to allow for all consumers to find the right wardrobing pieces at the price points they can afford or wish to pay.
Tootsie's in Houston, Texas. Photo credit: GenslerWhat If?
Successful product curation requires walking the line between delivering what the customer wants and delivering what the customer doesn’t-yet-know she wants. What if your store provided a “living laboratory,” defined as:
- a space where customers can see new exclusives and product synergies, be exposed to new designers or trends,
- where they can provide direct feedback on site utilizing technology enhanced experiences,
- and then see the space respond to their input and preferences in real time.
That sort of engagement puts the customer in charge but with opportunities to insert unexpected offerings, delight and surprise the customer, and drive repeat store traffic.
In terms of design, retailers should plan for flexibility in merchandising and departments. It's critical to leave extra space for experimenting, and programming that isn’t about product but just about delivering amazing customer experiences and memories. This “white space” can be used for educational, cultural or community interaction and participation. New technologies and leveraging the retailer’s web presence can help make this possible. These are also simple, inexpensive moves that retailers can use to improve the environments of their stores in secondary markets, which may not garner the remodel budgets that flagship locations in primary urban locations receive. It is very important to “spread the love” across the chain. In summary, retailers must create need based on want, because most consumers don’t truly need much of anything anymore. The product must be different, and must somehow endear itself to the potential purchaser in a very personal way in order to push consumers over the edge from “it would be nice to have” to “I must have this.”
Kathleen Jordan is a principal in Gensler’s New York office, and a leader of our retail practice with over 24 years of experience across the United States and internationally. Kathleen has led a broad range of retail design projects as both an outside consultant and as an in-house designer. She has led projects from merchandising and design development all the way through construction documentation and administration, and many of her projects have earned national and international design awards. Contact her at email@example.com.