Seldom does a day go by that I don’t see an article on Facebook or LinkedIn that declares in some grandiose way the death of brick-and-mortar, or “traditional,” retail. Huge headlines on the websites of Fortune, Newsweek, MarketWatch and many others constantly bemoan the fate of brick-and-mortar stores, broadcasting why we’re seeing our last days. I’m not a market analyst, an expert in trend analysis or even a store owner. I don’t have any advanced training in economics or finance. I also don’t have the perspective of Sammy Ash, Chuck Surack or Kurt Listug. Still, I’m calling this one “fake news.”
Firstly, when these articles discuss retail, they almost exclusively talk about big-box retail. I’ve read lots of articles recently, all spurred by the closings of chain retail stores. According to Forbes, 21 retailers are closing 3,591 retail stores this year. Nearly 3,600 is a big number—shocking even—until you look at the list. Among the top five by numbers of locations, accounting for 2,213 total closings, are Payless, Radio Shack, The Limited, Family Christian and Wet Seal (a strangely named, low-budget teen apparel store). Macy’s didn’t even make the top 10, whereas Kmart did. So, by retail market segment, we have budget footwear, electronics and cell phones, mall-based women’s clothing, religious books and products, and budget teen wear. I’m not shocked to find any of those businesses rapidly declining. Why? Well, I’m no expert, but I’ll take a crack
at explaining it.
Payless has always struggled to overcome the stigma of being a store for “cheap shoes.” Meanwhile, the ability of retailers like Kohl’s and many others to license, say, the Nike name and manufacture their own footwear, which says “Nike” on it, has made off-brand footwear for kids kind of a moot point. Also, footwear is huge online and it’s a very easy product to shop for because, if you wear a size 10 in Nikes this year, you’re going to next year, as well. Radio Shack was largely unneeded, struggling to find an identity over the last couple of decades. The demand for electronic parts shrank drastically as electronics became cheap and disposable; meanwhile, finding qualified salespeople must have gotten almost impossible. The business was an early entrant in the market as a cell phone go-to, but cellular service providers like Verizon got wise and stopped giving up profit points to third-party providers. Big-box retail became the source for televisions, and other home appliances were folded into department stores while, at the same time, becoming widely available online.
The Limited probably lost most of its audience. According to my wife, its selection was mostly business professional. It was also almost exclusive to the mall, which entails retail space that is very high rent. And, of course, malls have been experiencing dramatic decreases in sales and foot traffic anyway. Family Christian was mostly a bookstore, having changed from a non-profit ministry to a for-profit retailer in 2012. We all know bookstores have been suffering for a long time—just ask a former Borders employee. Sales had fallen 28 percent since 2008, and it was $90 million in debt. Wet Seal was just plain walloped by a generation that isn’t at all afraid to buy things online, particularly when retail locations aren’t quick enough to restock inventory or respond to shifting trends. People don’t want to wait anymore. If you don’t have it, they’ll pull out their phone and order it.
So, if the Internet is wiping out malls and large chain retailers, then why are we still here? MI retail is a tiny market segment. It’s likely that, at no time since I’ve been alive, has more than 10 percent of the population played an instrument. Specialized retail fares better because its customers have different needs. Many of our customers still want to put their hands on products; at a minimum, they just want to try them. And, at stores that have adopted smart sales strategies to embrace price-driven shoppers who are hard to please, they might buy.
Nevertheless, we in MI do have our share of chains and Internet-based retailers, and we’ve all seen stores go by the wayside. It’s also true that e-commerce has greatly affected the landscape for MI retail. It’s been discussed in this column, at NAMM U Idea Center Sessions and in trade magazine articles ad nauseam. You can also get some perspective on changes within our industry from my cover story this month about Sweetwater.
Our industry is constantly changing, and smart retailers embrace it. Predicting music trends is a big part of it. You must be able to identify early what’s growing in popularity, and then make sure to shift resources toward those items to capitalize on the changes. The most successful store owners and buyers I know possess that skill, and I admire it. One or two times, having had overwhelming evidence in front of me, I’ve accurately predicted something; I’ve felt extremely lucky to have done so.
In my store—and probably in many others—these topics are batted around often. The Internet has changed us. It’s made us rethink our stores, our offerings and our response to Internet-only retailers, and it’s made us reevaluate how we buy and sell instruments. Our staff talks about what’s selling, what we need, what we should eliminate and what product stock levels we should maintain. We do it openly, both because it makes us more nimble and because no one has a monopoly on predicting what our customers want.
It can make or break our store to recognize which items consumers tend to think are less important to try in person (e.g., headphones) and which items they’re most likely to try in the store (e.g., effects pedals, acoustic guitars). Moreover, we need to know which items, such as ukuleles, are most likely to be impulse purchases. My whole summer will be spent poring over inventory. I’m a products nerd, so I actually kind of look forward to it.
The ability to capitalize on emerging trends is one skill; I want to highlight others in future columns. But, for now, I’ll just say this: MI retail doesn’t have to go away. If we’re smart, if we’re nimble and if we capitalize on our strengths, great local stores will survive and thrive.
What are some of the strengths you’re capitalizing on to keep your business relevant to customers in the face of online shopping’s growth? Give me a heads up at
gabriel@larrysmusiccenter.com.