Pay here. Pay over there. Or don’t pay at all? If there was one thing this year that truly shook up the traditional shopping experience, it was shoppers’ ability to take their merchandise and leave the store, feeling like they hadn’t paid.
Predictably, it started in the lab of Amazon.com Inc. (Seattle), which finally opened its Amazon Go cashierless stores to the general public after two years of an employee-only beta test in its Seattle headquarters building. And, just as predictably, Go had expanded to nearly 10 open-to-the-public stores by year’s end and had spawned a growing number of imitators.
Amazon’s “just walk out” technology is powered by computers, cameras, sensors and a free downloadable app. Other initiators adopted other models, like mobile point-of-sale (mPos) that records all transactions into shoppers’ smartphones; systems based on facial and voice recognition; biometric technology; and cameras right on the shelves.
Surprisingly, many shoppers didn’t adapt to the new way of paying (or not), with some saying it felt like stealing to them. And Walmart Inc. (Bentonville, Ark.) even shelved its Shop-and-Go version when most customers preferred not to use it. Nonetheless, if your crystal ball is functioning, this is the future.
And now for the past 12 months...
It felt like the longest death watch since Queen Victoria. Sears Roebuck (Hoffman Estates, Ill.) – once the largest and most innovative retailer in the country – finally announced its bankruptcy filing in October, starting to close all of its stores and taking Kmart with it.
The decline had been ongoing even before hedge-fund entrepreneur Edward Lampert took charge in 2005. The rumors, even back then, were that Lampert was all about the real estate – more than 3000 locations at the time. But that supposed cash cow was based on old, poorly located stores, many in failing malls. And Lampert remained ensconced in his Florida estate, far from the Sears sales floor.
Toys “R” Gone
Second-longest slow death: Toys “R” Us (Wayne, N.J.), one of the princes of the category-killer days, declared bankruptcy in September, closing its 735 locations and ending sales on its website. ’Twas crushing debt that killed the beast.
End of an era? Maybe not. In October, the company’s lenders indicated their intention to pull out of bankruptcy auction and revive the Toys “R” Us and Babies “R” Us brand names. Their reason, reportedly, was that “the brand was too valuable to give up.” Seems that’s what Eddie Lampert once thought, too.
It was an up-and-down year for The Bon-Ton (York, Pa.), the 120-year-old department store chain. In February, it filed for bankruptcy after seven straight unprofitable years. In April, a retail real estate investment trust (REIT) bid to save the company; a week later, those plans fell through. And a week after that, The Bon-Ton said it would liquidate all 267 stores.
But wait! In August, the company’s website had a “Stay Tuned” message. CSC Generation, an Indiana holding company backed by Chinese and American venture capitalists, paid $900,000 for Bon-Ton’s customer database, email addresses and trademarks, turning it into an e-commerce business – and maybe even opening some stores again.
As if traditional retailing needed another jolt, Hudson’s Bay Co. (Brampton, Ontario) announced its Lord & Taylor (New York) subsidiary would move out of the Manhattan landmark building it had occupied on Fifth Avenue for 104 years. Nor was this the only retail flagship to go down this year.
In March, Macy’s Inc. (Cincinnati) announced it would be closing the downtown store in its own headquarters city. In January, founder Gordon Segal said he’d be closing the Crate & Barrel (Northbrook, Ill.) flagship store on Michigan Avenue in Chicago. (It will become the world’s largest Starbucks store.)
While other retailers were partnering with digital innovators, Macy’s partnered with a retail innovator.
In May, the country’s largest department store chain acquired Story (New York), the one-off Manhattan store that changes its entire merchandise and visual identity roughly every quarter to tell a new story – like a new issue of a quarterly magazine, according to Story founder Rachel Shechtman.
Macy’s also brought on Shechtman and her special brand of inventiveness as its Brand Experience Officer, as well as her sister Jenny as Vice President, Operations, at Story. In the fall, this publication named Story the 2018 winner of its annual VMSD/Peter Glen Retailer of the Year award for its (yep!) innovation, the same award Macy’s won in 2012 (and in 2005 as Federated Department Stores Inc.).
Queen of Spade
In June, pioneering apparel, accessories and handbag designer Kate Spade was found dead in her New York apartment. She was 55; police ruled it a suicide. Husband and business partner Andy Spade said his wife had “suffered from depression and anxiety for many years.”
In September, the American Association of Suicidology hired a Connecticut artist to paint a bag in the artistic, whimsical Spade style for its National Suicide Prevention Month. The painting is titled, “Kate Spade Painting Suicide Prevention and Awareness.”
In the Woods?
The answers are “yes” and “it did.” In July, Build-A-Bear Workshop (St. Louis) had what it considered a brilliant idea – a nationwide promotion called “Pay Your Age.” Customers paid a price equal to their ages for any stuffed ursine. (Adults could pay the ages of the children who accompanied them.)
The idea was, in fact, good. The execution was horrible. The retailer was unprepared for the turnout. Stores were inundated. Long lines formed. Shoppers at the ends of those lines were turned away, disappointed, angry and bear-less. Build-A-Bear tried some customer-friendly damage control, but it had the feeling of a Band-Aid on a shark bite.
Another Crack in Walmart’s Ceiling
Walmart Inc. made history in January when it named Judith McKenna as President and CEO of Walmart Intl. McKenna had previously been Executive VP and COO for Walmart U.S. As head of 6300 stores in 27 countries, she will be the only one of the retailer’s five top executives with the President/CEO title.
McKenna is only the second female President/CEO in the company’s 55-year history. (Rosalind Brewer served as President and CEO of Sam’s Club for four years before resigning in June 2017.)
If McKenna is the most significant promotion in Walmart’s history since David Glass replaced founder Sam Walton as CEO in 1988, then this truly is a Glass ceiling that McKenna has broken.
Next Stop: Capri
The runways of New York, Paris, London and Milan all quivered in September when Michael Kors Holdings Ltd. (New York) acquired the House of Versace (Milan) for more than $2 billion. Kors will be renamed Capri Holdings after the deal is completed. Its expectations are to become as big a fashion combine as Tapestry Inc. (New York), the former Coach company that acquired Kate Spade in 2017.
The Versace family will still be financially involved in the business and, according to Kors Chairman and CEO John Idol, Donatella Versace will remain the face and force of the Versace brand. (Note: that would be the real Donatella – not Penelope Cruz, who only plays her on television.)
Reports of my Death are Exaggerated
This might have been a bumpy year for retailing, but an apocalyptic one? Not even close.
At mid-year, U.S. retailers posted double the expected Q2 sales gains. In April, Best Buy (Richfield, Minn.) opened a 36,000-square-foot store in the Salt Lake City area. It was the retailer’s first new store in the U.S. in seven years. In the last three years, it had closed 42.
In September, Target (Minneapolis), Walmart and Best Buy announced record same-store sales in the second quarter. And those are dudes with lots of stores. Perversely, they were helped by the 7000 store closings during the year. Since only 13 percent of total retail sales are online, brick-and-mortar shoppers flocked to whichever doors were still open.
According to a Forbes article on the subject, “Consumers now expect a more convenient, tailored … shopping experience, whether they are online or in-store. The new face of retail involves consumers engaging with a brand seamlessly across their e-commerce, brick-and-mortar, social media and every other channel to create unified, consistent encounters.”
So let’s put the “A” word away for another year. Just keep innovating.
And Happy New Year.
Illustrations by Don Heyl, Cincinnati