There is a lot being written about retail at the moment, most of it focusing on the unprecedented amount of store closures taking place in 2017. And while my goal on the blog is to always support retailers and remain mostly upbeat, I obviously have to address this topic. But please stay with me- because towards the end I will dive in to some industry upside that will hopefully make you smile. Let’s get to it…
On Wednesday Michael Kors announced that they are closing 100 – 125 of their brick and mortar locations over the next two years. This wasn’t a surprise by any means, based on lackluster traffic and luxury sales trends. It’s unfortunate to see additional stores shut down, but MK in particular hasn’t evolved their footprint at all over the last 5 years. So while they have a strong, recognizable fashion brand- the stores themselves haven’t excited customers or moved the needle in terms of engagement and technology. Which means closing these locations is an essential move for MK. It allows them to prioritize the more profitable locations and move the brand forward. I for one am hoping they can do just that.
So who else is closing select stores? (Get ready, it’s a long list…)
JCPenney, Macy’s, Kmart, Sears, Payless, Radio Shack, HH Gregg, Guess, BCBG, Abercrombie & Fitch, Crocs, Chico’s, CVS, The Children’s Place, Rue 21, and most recently Gymboree. And that’s not including select retailers that have closed completely: The Limited, Bebe, and Wet Seal.
Most of this is due to the online shopping trend that continues to grow, while mall traffic declines. It also has to do with our spending patterns, knowing all of us have been shifting how it is we spend our disposable income. Experiences (both personal and family based) have been a priority over shopping. And while home, beauty, active, fast fashion, and baby continue to be stronger categories overall, there is a ton of retail square footage that is unprofitable and extremely expensive to maintain. Retailer’s are doing what they have to in order to a. make money and b. stay relevant.
Trust me, no one wants to see mall’s deserted and stores closing, but in order to catch up with the reality that is Amazon (one stop shopping from your couch and delivered in 24 hours), everyone is doing what they can to make stronger shopping experiences for their customers. Which includes strategies such as reward apps, enhanced e-commerce sites, quicker turn on fashion, brand partnerships, delivery services, and value pricing.
So yes, retail is definitely changing, and no one is sadder than me to see stores close, but at the same time I am excited to see where this is all going. I want the brands that impact our lives for the better (and give us nothing but joy while shopping them) to stick around- so if closing locations and shifting resources to technology is the way to do that, I am in.
Okay- so I promised some positive news and here are a few bullets before you close your browser!
Ulta Beauty posted positive Q1 net sales +22.5%, with same-store sales +14.3%. The company is on fire, and yes- it's rare (and awesome) to see "excellent performance" on an earnings statement.
Lululemon saw their Q1 gross margin increase by 110 basis points compared to 2016, which is noteworthy. The company is definitely moving in the right direction, despite a 1% decrease in comp store sales.
Costco posted a +5% same-stores sales increase for Q3 2017. Which is significant given it’s competition from Amazon, Walmart, and Target.
Thred Up launched a new shop on their site called “The Mismatched ‘Maid” and I love the concept. With most bridal parties wanting to look coordinated yet unique, this is a perfect way to capitalize on that trend without breaking the bank.
Fred Segal (a California staple) is opening a new 22,000 sq. ft. flagship in LA, calling it a style and design laboratory. It will have innovative assortments, event space, a restaurant, and an in-house florist.
I know that was a long post today, but I am hoping you are walking away with a bit more insight on what’s happening within retail. As always, if I missed anything please let me know. Enjoy your Friday everyone…