YES I know that traditional retail stores have been having a hard time over the last several years as shoppers buying patterns have been changing. While we have seen many consumers, especially the younger crowd increase their spending online, the fact is that traditional retailers still win when it comes to ringing up sales. However, the chipping away at the retailers does take a toll and many stores have been working around the clock for ways to combat the changes.
WELL, here is one of the craziest things I have seen of a retailers brilliant idea to give itself relevance. Nordstrom in West Hollywood, California just opened and customers who stroll in will see tailors altering suits, stylists giving fashion tips and will be offered some wine or fresh squeezed juice while they wait for a manicure. All sounds like a wonderful spa-like experience, right? What the shoppers won’t be able to do is buy clothes that they can take home with them!
THIS is Nordstrom’s new tactic for a struggling business. They want to cut costs while keeping their shoppers interested so they are opening a store that will be like a page from an e-commerce website. The concept: Little or no merchandise will be stocked at the store! Come, pick out a lovely dress, place your order and leave empty-handed.
MY goodness, don’t they realize that the problems online apparel sellers had, and still have, is that customers want to try on the clothes first. Having a retail store with no merchandise is like the Emperor wearing no clothes. They want you to come in, browse around some catalog pictures and mannequins, spend your money and wait for the mailman to bring your goods. Sounds an awful lot like online shopping but with more work as you have to drive to the store, park and complete the transaction in person. I am devoting a good portion of our news column to this today because apparently the big influential retailers think this is the way to go. Wal-Mart is eyeing the idea of stores with no inventory as well and may be considering this for their future expansion. While it certainly streamlines things at the stores and massively cuts overhead it create absolutely no shopping experience for consumers and I have to say it looks like it will be a disaster all around.
BUT what do we small retailers know? Wal-Mart spent $310 million this summer to buy Bonobos, a “guideshop” pioneer. Stores filled with showroom pieces and samples you can order. They’ll be delivered to you later. Thanks for coming in to shop! Many of these companies are publicly held and Wall Street is not exactly embracing this type of unit. Perhaps that’s why Nordstrom was looking to take themselves private recently. Who knows, but what I do know is that this seems like a completely ridiculous idea. Maybe our small stores will do well by being so unique that someone can actually come in, buy something and take it home with them! Who’d have thought there’s hope after all.
The giants like Amazon, Target, Walmart and Costco have many competitive advantages over small click and mortar and e-commerce businesses that makes it very difficult to compete on identical products. Competing with these giants is addressed in many articles over the last years but as astute small business-people see with many big brands jumping onto the Amazon bandwagon, the prospect of beating Amazon is just not realistic.
The fact is that these large retailers have a real competitive advantage over smaller ones. Amazon is both a retailer as well as a marketplace which allows someone to buy from a third-party retailer on their website. It turns out that many of these third-party vendors sell for pennies in profits. How could you compete with that, any WHY would you?
The only success that I can see in competing with Amazon is to try to sell something different than what they sell so you’re just not competing with them. That is a mantra that is pushed often by writers and speakers at merchandise shows, but the reality is WHAT could you sell that is not available on Amazon?
Maybe a custom product or hand made product would work, but that is not practical for many of us mainstream retailers. Some retailers have taken to selling merchandise on a subscription box basis — and that works for some merchandise but really not the answer a retailer like myself wants to see.
The sad news is that all of the writers and speakers that I have read and listened to over the recent years stress finding unique merchandise (good luck with that!) and at the recent ASD Marketweek show there was a speaker who caught my attention when he said Amazon was killing our small retailers – but then went on to say that we can fight them by giving better customer service to our shoppers. Really?! This is the sort of dribble that permeates our industry that does no service to anyone who has been active for more than a month or two! You’re not going to combat Amazon with better in-store service, especially since you’re going to be on an uphill battle even getting the shopper into your store.
I hope that maybe our readers have some tips to share that have helped them combat the giants and will share there here for our fellow retailers. There is no simple answer to our survival but I do know it’s not customer service or offering a latte to shoppers at our stores.
This article brought to you by Retailers Forum Magazine, a monthly wholesale merchandise magazine servicing the industry since 1981 with no-nonsense articles and information to this country’s retailers.
WHILE the 2016 holiday sales season was profitable for many independent retail stores, it was not as promising for some of the major chain stores who have announced below average earnings. The post holiday numbers are in and the retail industry as a whole had the largest increase in sales in the last five years. Consumers opened their wallets and made a record amount of purchases, but much of the retail money was spent online. The droves of shoppers did eventually turn up at the retail chains but they were driven by heavy discounts.
PROMOTIONS are great for shoppers but not so much for the store owners. While many small retailers held their own, the large chains felt the brunt of the challenges.
MACY’S has announced that it will be closing about 100 stores in 2017, which is roughly 15% of their locations. Along with those closings comes job losses which are expected to be as many as 10,000 workers nationwide. Sears has also announced the closure of many of their stores as well which will also result in many layoffs.
AMERICANS were in the mood to spend – just not at traditional stores. Independent retailers were quick to realize this and have been building, tweaking and improving their online presence to make sure they prosper for the new year. The challenge that all retailers have in this changing environment is to better define their place in the market and create experiences both on and away from the shoppers computer keyboards. Stores will need to become more of a destination or entertain customers in order to prosper. The retail store is not dead, but the retail store of the past is. It’s a far cry from the days of unlocking the front door and letting the line of shoppers inside!
SHOPPERS are planning to put themselves at the top of their holiday shopping lists according to some new information just released. Many shoppers plan on having a more conservative budget this year with the average consumer planning to spend around $935.00 for the holiday season. Total spending includes gifts for others, self spending, food, flowers, decorations and greeting cards for the holidays. Last year spending was just slightly higher.
RETAILERS should be ready for a rush of shoppers in the weeks following the presidential election as they get more economic certainty and will start taking advantage of the promotions and deals. It is believed that once the election has passed shoppers will pull themselves out of the election doldrums and get into the holiday spirit.
FIFTY-eight percent of consumers plan to buy for themselves, with spending up 4% over last ear and marking the second highest level of personal spending in the last 13-years. Many shoppers are taking the “one for you, two for me” approach this year and retailers are preparing a vast array of merchandise and promotions of items that shoppers want to give as great gifts as well as buy for themselves. Make sure your store follows suit on this trend.
OVER 93% of those surveyed also stated that they would be taking advantage of free shipping and conveniences to buy online and pick up in store, as well as expedited shipping.
CLOSE to half of those surveyed will be tackling their holiday shopping early again this year, many having already started in October. The same percentage said they would start in November and 18% are waiting until December. Millennials seem to be waiting the longest to wait out for the best deals by retailers, with over half of the group waiting closer to the holidays to start shopping.
THE hottest items this year: Gift cards at 61% followed by clothing and accessories at 54% and then books, CDs, DVDs or Videos at 40%.
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Is it just the “Bernie” supporters who want everything for free, or has the state of California jumped on the bandwagon of giving away the farm?
Retailers in California are feeling the sting of increased shoplifting throughout the state as the government powers that be changed the laws when it comes to penalties for the CRIME of shoplifting. Turns out that the new rules say that anything stolen that is less than $950 keeps the crime a misdemeanor.- and likely means that the thieves face no pursuit and no punishment.
It is already being reported by many larger retailers in the state that shoplifting is up around 15 percent already since voters in the state approved Proposition 47 and ended the possibility of charging shoplifters with a felony and potential prison sentence.
The recent ballot also lowered penalties for forgery, fraud, petty theft and drug possession. WHO was doing the voting? Criminals!! What civic minded person would agree to the ridiculous changes in the law?
Retailers are saying that while they are installing more security cameras and watching shoppers more carefully it’s just not worth pursuing the shoplifters since the laws no longer protect the store owners and are favoring the criminals.
THIS is why Trump and Sanders have picked up steam this election year!
Has the retailing world gone insane? Over the last several years online sellers have made significant dents in brick and mortar stores in every market and in every city. Many retailers had to jump into online selling whether they wanted to or not to keep a presence to the consumers. This addition has been costly and for many retailers has not been all that popular, as many online shoppers are scouring for the cheapest price.
Fast forward to today when new retailing reports are showing that many online stores that had been exclusively on line are venturing into brick and mortar situations. Has everyone lost their minds? Is this backwards day?
An article that was published in USA today talked about an online fashion retailer in San Francisco that has sold online only for a decade and then decided that it would be a great idea to open a physical store so he could interact with the customers. Lo and behold he discovered that he makes larger sales and were able to interact better with the customers. OMG – something us physical retailers have known about forever!
So now the hipster millennial trend is the NEW thing…opening physical locations! They even have a name for it – it is called omni-channel marketing. We used to just call it RETAILING!
The newfound genius’ have discovered that there are great benefits by having a physical location and those selling fashion feel they can no longer ignore the client who wants to touch and feel the merchandise. Wow. something we have all been doing for eons until many were put out of business because of these same genius’ saying the internet is the ONLY way to sell. So, they rise through the carnage THEY made of the brick and mortar stores only to bring it back again. But this time they think they have invented a NEW way to sell!
My favorite addition to this story is that after years of the decimation of book stores and the burying of Walden Books, Borders and the dwindling down of Barnes and Noble, an announcement was just made that Amazon will be opening physical book stores next year! I give up!! Is it just me? Share your thoughts…
The Labor Department’s proposal to expand overtime would suffocate employee development and company growth, a small gift shop owner from Alabama testified recently at the hearing. Many wholesale merchandise suppliers and independent retail stores are up in arms over this new proposal.
Having a blanket overtime rule ignores the fact that the cost of living from city-to-city varies greatly. He pointed out the major differences from his small Alabama city to New York City. Such a dramatic one-size-fits-all increase will have big consequences for workers as well as small businesses. Every dollar spent on compliance of this regulation would have been one that could be used to grow businesses and invest further in employees.
The National Retail Federation has found that the more than doubling of the overtime salary threshold will force many employers to convert their salaried managers to hourly,. non-exempt status, and their managers would oppose the rule because overtime expansion would limit their opportunities for career advancement. It would also have a disproportionate impact in rural, low-wage areas.
Converting salaried positions to an hourly wage adds pressure to get the job done in a standard 4-hour work week. Most employers will not keep the workers past the 40-hours because of the exorbitant costs and this will hurt everyone.
This new overtime rule is bad for employees as well as business owners, it was argued to the Labor Department and small business owners around the country need to speak up against it.
The trend that we here at Forum have seen is that many employers are cutting their workers hours. With the mandatory health care inclusion now set at 30 hours, we have heard from many workers complaining their hours now are averaging under 30 hours weekly so employers do not have to put them on their health care coverage. How is anyone supposed to make a fair living and support themselves or their families on part time work. Our country has become one of part-timers and “gig” workers. When all the politicians talk of job creation it would be nice to know if they are meaning full time, full employed workers like our parents enjoyed during their careers.
What do you think? Share your comments with us.
For the past several years Congress has been kicking the can down the road on what to do about taxing sales made on the internet. It was all the way back in 1992 that the Supreme Court issued a ruling that required online businesses to file sales taxes only if they had a physical presence in the state where the sale was made.
It has been quite a while since 1992 and internet sales have pervaded the mainstream, making it difficult for brick-and-mortar retailers to keep up with their online counterparts. Often it is just the sales tax that makes the difference between a store making a sale or losing it to some company online.
Those against the internet tax complain that it is just another tax to the public, but the National Retail Federation points out that the law is already on the books that people must report purchases on their tax returns as “use tax” – but less than 1% of anyone actually does.
Making online sellers collect sales tax would even out the playing field for regular line retailers. What do you think?
Well, here is something I think will be of interest to many business owners. If you are a boss and your staffers vent on social media about their jobs – you have no recourse.
The law says that employees are allowed to vent and the government protects these workers’ rights to say almost anything they want about where they work even if it is mean-spirited or insulting. It is illegal for an employee to be fired for a post about working conditions, whether it is regarding to pay, hours, tasks, difficult supervisors or any other issue.
Social media proves that it can be a boom or bust to a business. Employers have very little rights under the law when it comes to protecting their businesses against the wrath of angry workers.
One of the few times an Employer is protected is if the poster is giving out trade secrets, financial information or posting about clients or customers. Employees can be fired for postings that are racist, homophobic, sexist or discriminatory. But, calling their supervisor out is not grounds for firing.
Has freedom of speech gone too far when the employee is protected as they bash you or your business? What do you think? Share with us.
Also, one thing I will remind business owners of: If your store is not unionized your workers are considered “at will” employees. They can be dismissed with no reason whatsoever in most cases. Hint, hint!
Wholesalers of merchandise have had quite a run on things over the last few years with many retailers thinking they could bypass them by going online and trying to find the direct manufacturers of merchandise. What retailers found is that the internet is a maze of confusion and there are many unscrupulous dealers who have no connections to merchandise.
That said, retailers around the country have realized that wholesalers play a valuable part in the success of their businesses. A good wholesaler knows what products are trending and has the resources to buy in large quantities to keep merchandise costs competitive. Established wholesalers have the connections to the major brands and are allowed to purchase them for resale. Many novices find out quickly that the major brands are not interested in selling to small independent retailers.
I think one of the most challenging things for retailers this year was that many tried to buy directly from overseas suppliers to save money. Buying overseas requires a skill level that most of us do not have. There is a lot of quality control issues as well as payment terms and shipping that are best left to the professionals. How many of you have tried buying overseas only to be frustrated when the merchandise arrives broken or misrepresented? Unlike a local supplier, it is often difficult and expensive to try to remedy overseas purchases gone bad.
This is where the established wholesaler comes in. They negotiate regularly with overseas suppliers and take on all the risk. Before it gets sold to you, defective items and problem wholesale merchandise is removed so you get only the top quality in the lot. This is why importers are entitled to their small percentage of markup when they resell goods. It is a small price for retailers to pay to have someone ensuring the quality of their purchases.
What has been your experience with wholesalers? Share with us…