What Happened?

What wakes you up in the middle of the night? According to Peter Glen, my colleague, it's “the need to do it all over again.”

Retail is a lot like the earth it inhabits; it never stops spinning. Three prominent retailers are currently trying to stop the spinning. They're prime examples of the never-ending challenges you face.

The Gap was the 1990s poster child for doing everything right. The Gap Dancers single-handedly revived swing – and they sold khakis!

Three years later, Gap is no longer swinging. In the last year, its operating income and net income both fell by a third; its net profit margin was cut nearly in half. It's closing some stores.

What happened? “The khaki-denim-twill uniform stopped being trendy,” says Mark Artus, recently named partner at RPA (Columbus, Ohio). Also, Artus says, the company had too much real estate. “Shuttering stores is the right direction,” he says, “as opposed to scaling back on advertising and new-product initiatives, which is what it disastrously elected to do last fall.” One development to watch: a new flagship concept at Dallas Galleria stacking Gap, Old Navy and Banana Republic. “Gen X and Y still do 40 percent of their shopping at department stores,” says Artus. “Having the entire Gap Inc. package in one place has a department store appeal.”

Nature Company exploded on the market in the 1990s with an unmistakable point of view: respecting the earth, making life and the world better. Who could argue with such authenticity and inspiration? It was a magnet for mall shoppers.

Then man turned on Nature. The focus on conservation and the environment fell out of vogue, the company's sales dropped and its margins thinned.

What happened? “Their products never evolved,” says Paul Lechleiter, senior vp of FRCH Design Worldwide (Cincinnati). “How many rain sticks can one person buy?”

Now Nature Co. is owned by Discovery Communications. “Discovery Channel is a full, multi-dimensional brand,” says Lechleiter. “Connections between the TV network and the retail experience make learning cool and edgy. The store design is now infused with touchpoints that express its brand authenticity.”

Nordstrom was the most sure-footed of retailers. From the clean and open stores to its customer-service mania, this was a retailer clear about its mission.

Now, Nordstrom is trying to regain that footing. A number of bad quarterly performances has led to management reshuffling and a serious reduction of expansion plans.

What happened? “In the 1980s and 90s, Nordstrom was the paradigm for a customer-friendly environment,” says Eric Feigenbaum of GlobeArts Studios (Hartsdale, N.Y.), “but in time, customers demanded an updated format. Nordstrom is now responding to this challenge, moving forward with contemporary presentations and lifestyle statements that appeal to savvy New Age customers.”

The scary thing is that none of these retailers changed anything. They continued to capitalize on the things that were working. Unfortunately, the world shifted on them. Maybe what hurt them is exactly that: They didn't change anything.

Like sharks, we either keep moving or we die.