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The Art & Science of Shopping: What Price Survival?

Outdated infrastructure inhibits retailers' ability to stay competitive. Image © Kathleen Jordan

I remember the first time I went to Tokyo. People warned me that I would need to get a temporary phone for the duration of my trip, because the cell service was incompatible with American phones. Too much technical detail ensued, but needless to say I got the gist of what they were saying. I actually didn't get a phone, and went the four days without one. It was very stressful, but being of a somewhat advanced age I dealt with it, drawing on my memories of what life was like when I had not been so tethered to the digital world. (Please bear with me; I have a point in here somewhere.)

Anyway, one of the technical bits I recall my adviser on this matter explaining dealt with fiber optic cabling. It seems there's an alternative to the unsightly power lines that power the domestic phone systems: Running fiber optic cabling underground. Emerging countries are seizing the benefit of coming late to the telecommunications party by creating their infrastructure utilizing the latest technology. It made me realize that the U.S., being an originator of innovations such as electricity and the telephone, is now a slave to old infrastructure, bogged down with huge antiquated equipment and power lines stretching endlessly across our landscape. Unfortunately, in the last few years we’ve all seen up close how susceptible these vestiges of 20th century industry are to Mother Nature’s wrath. Now, I realize I’ve mixed my metaphors, but I think you probably get my point.

The parallel can easily be drawn with older, more established retailers. These older stores are saddled with an antiquated corporate structure, a corporate culture resistant to change, a myopic business model, and most likely a CEO who is over the age of 65. New retailers have the opportunity to go straight for the fiber optic cabling. Some of these new retailers have started as pure online players, developing their business model in a very new way—one that allows for a seamless conversation the day they chose to add a brick and mortar presence. Moving in the other direction is like swimming upstream against the current.

I recently read a snippet in WWD about a luxury department store that started shifting its product buys to include brands bloggers were raving about. These tend to be brands that the typical in-store customer is unaware of, so the retailers shifted the product from in-store to the website. These new brands found a greater sell thru rate online, indicating that the online shopper is plugging into the blogosphere for their fashion advice and more “in the know” than the old guard brick and mortar shopper. So if the buying strategy can be so impacted, what else is? This is the question retailers need to be asking themselves, because if they’re not, they’ll be replaced like the antiquated equipment power companies are pulling out of old transfer stations.

I think the key here, as always, is to be true to who you are. However, not who you are now, but who you will be when you grow up. The retailer must evolve in a way that makes sense for its business, but if it’s unable to look objectively at its current operations, it will eventually fail – regardless of scale (yes, Mr. Wexner, small specialty retailers can become irrelevant also.) Those of you that have kids can relate to the parallel that we counsel our teenagers that while transition is difficult, it is also necessary for growth. So to with evolving the mature corporate structure. A recent study by WWD in partnership with Berglass + Associates noted that seven new senior management positions are emerging related to all things digital (content, social media, brand experience to name a few), and that these C-Suite level individuals will directly report to CEOs.

Macy’s has been remarkable in developing new silos, like the creation of “Director of Millennials,” and Saks has been vocal about how they have retooled their operations to align the online with the in-store teams, creating greater consistency across sales channels as well as effecting things such as employee compensation and vendor relationships. If ships this large can figure out a course correction, anyone can. Obviously it takes serious capital, cultural commitment, and a whole lot of courage, but the alternative is far more costly. Retailers must design the future they want, and pursue it with authenticity and passion. I will end with this: Be the leader, own the space where you want to live.

Sidebar on leadership: Last week Bloomingdale’s announced that its CEO, Michael Gould, is stepping down on Feb 1, 2014 after 22 years at the age of 70. His successor, Tony Spring, is 48, who he started grooming 10 years ago. That’s what I call successful succession planning, and a very good start.

Kathleen Jordan
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 kathleen_jordan@gensler.com.

Reader Comments (1)

Hey there, you got my attention with the construction sign about the dangers of the scaffolding! I just came back from Tokyo and really had some good inspiring spaces, places and food. I will try to get the notes and sketches into a blog piece.
11.6.2013 | Unregistered Commenterdoug wittnebel

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