Retail advertising awareness drops

Tis the season where many retail advertising makes or breaks the retailers themselves. That’s why Stealing Share has been offering suggestions and criticisms for the industry lately.

retail advertising
With low awareness of all retail advertising, the future of those retailers is uncertain.

It’s a market that’s simply a mess. NBC News recently reported that a handful of retailers may announce closings unless this season’s sales drastically change things. Shoppers are increasingly shopping online. That’s a problem for retailers because Amazon owns that space.

The simply fact of the matter is that retailers are in this quandary because they thought they could exist on low prices and relative convenience. Turns out that shopping on Amazon is more convenient and offers the better deals. Who knew?

Shoppers also buy based on brand. And, right now, there is so little loyalty among consumers to those brands that the new parlor game is figuring out the order of retailers going belly up.

Most ignore retail advertising.

The news gets worse. The YouGov BrandIndex reported that almost half of all large retailers are seeing their retail advertising awareness drop from a year ago. Kmart and Best Buy suffered the biggest drops, but the whole slate of retailers have lower retail advertising awareness.

A bit of caution here. Awareness is one thing. I’m sure most people know of Kmart and Best Buy. What meaning they gather from those retailers is what creates preference, the more important factor.

But low advertising awareness means that those ads are not resonating with consumers. They are simply ignored. And they should be.

The one retailer whose retail advertising is resonating is, get this, Amazon. That’s partly because its new spot – A Priest and Imam meet for a cup of tea – is unlike anything else on the airwaves. It hits a political and social nerve that no other retailer would ever attempt.

But it’s also because Amazon means something to consumers. What does Macy’s mean? What does Old Navy mean? Bed, Bath & Beyond? Any of them?

We can help. Call us. But it means being honest in your own advertising and brand evaluation. Otherwise, the doom and gloom continues.

Nike store showing retail how to look ahead

If you’ve been reading the new articles on this site (and blog), you’ll notice that we’ve been digging deep into the retailer industry. Stores are closing. Sales are dropping. And all retailers are looking for solutions.

You can find our recommendations here, along with a complete study here. But most brick and mortar stores are scrambling to find ways to transform their locations into destinations shoppers will actively seek out.

Nike store
A new Nike store in NYC is showing retailers how to join the technological age.

A new Nike store in downtown New York City is offering a template for just that future.

The shop is a complete interactive experience. Shoppers can try out new products in actual sports settings, such as on treadmills while sensors record the best fit. A personalization studio allows shoppers to laser engrave on their shoes and touch screens mimic the online experience of choosing product.

It’s not exactly what we’ve recommended, but it’s very close. We believe the in-store experience has to join the technological age, recommending digital measurements so shoppers can browse clothes that actually fit.

The Nike store overcomes many retail issues.

Right now, most brick and mortar retail stores feel and look like something from the Eisenhower era. The world has simply passed them by and few integrate their online experience with their in-store one.

That’s how you become irrelevant. (And watch Amazon eat your lunch.)

The Nike stores are a step in the right direction, with the right kind of thinking. There are land mines here, though. A Nike store like the one in NYC – a 55,000 square foot monstrosity – is costly to replicate. (Nike will replicate one in Miami soon.) But the thinking behind such improvements is exactly what retail needs.

There’s another reason why I think this will be a success for Nike. It has a meaningful brand, one of the most meaningful in the world, which says its customers “just do it.” That’s a leadership position.

Retailers must re-think what they do in stores, but they also need to ensure they have a differentiating brand that gives them permission to do all those things. And make them important.

Department Store Rebranding: Mandatory

Department Store Rebranding
Merchandise is too crowded

Why talk about department store rebranding? Because the department store market and the retail industry needs a complete reset (read a detailed market study of the entire retail category here). Department store chains are closing stores.

Malls are empty, traffic is down 5.8% from last year nationwide. Consumers spend their money on experiences (hold that thought), such as dining or travel rather than shopping. And too many retailers count on bountiful holiday sales to save their year.

Department Store Rebranding What the retail industry truly needs is clear: Department store rebranding— a complete rethinking of the model.

Department store rebranding is the highest priority. Change is needed. Without change, retailers that depend on sales from their brick and mortar locations are irrelevant.

It is worse and more desperate for major department stores. They will become extinct. This is especially the case for the legacy department stores. In a nutshell this is the entire argument for department store rebranding. Change now or die.

Amazon in particular and the web in general is the new normal for shoppers, dominating the retail industry. Amazon dominates by being an online portal for items ranging from electronics to toys to apparel. You would be hard pressed to find anyone who has not purchased through the online giant.

Department stores. What’s next?

Department Store Rebranding So what are retailers to do? More specifically, what are department stores to do? There are all sorts of tactics they can employ to stem the plunge of market share. But they will fail.

Department store rebranding from the ground-up is a needed strategic decision and not just a tactical one. Without this complete overhaul of department store rebranding initiatives and the total repositioning this means the vaunted old brands are finished.  And finished soon.

We’ve dissected many retailers, including a report written for the Retail Customer Experience which encourages retailers to merge their in-store and online personalities.

We’ve also said “stop trying to be everything to everybody”. But tactical changes won’t save department stores. They need strategic change. They must redefine the value proposition for the target shoppers and convince them that their brands are relevant.

Department store rebranding restores relevancy.

Department Store Rebranding One way you recapture relevancy in a market — and even succeed — is rebranding. Department store rebranding pulls them out of the ditch because, done properly, they are meaningful to target audiences. And the store is more important than simply restating product or category benefits.

Without that preference, no tactic or strategy can ensure the brands future success. If you are a department store, rebranding is the only way you can survive.

Rethinking is more than just rebranding department stores and their messages.

Department Store Rebranding Rebranding department stores is more than just a new name, logo and tag line. It is fundamental change— real changes in operations and structure. Changes implemented to magnify and support the new brand strategy.

Even traditional rebranding does not go far enough. Retailers must rethink everything.

The market, especially those large department stores like Macy’s, Belk’s, JC Penney, Harrods, Bergdorf Goodman, Lord & Taylor, Bloomingdale’s, Sears, Debenhams, Meijer, Von Maur, Boscov’s, The Bon-Ton, and the like, are sliding into irrelevancy and, in many ways, are already irrelevant to the new shopper.

Department Store Rebranding Shoppers vote with their dollars. And the department stores feel like they have passed their own time limit on this earth.

Right?

Probably right. Department stores: Be something different than what you are today. That’s how you survive. The ongoing sales promotions and specials that you rely on don’t do the trick. Black Friday won’t save you.

Their stores are overcrowded with product, there are no sight-lines, crowded shelves does not say variety rather it creates a feeling of being hurried. As a result shopping for apparel is boring at best and harried at its worst.

Department store rebranding for experience.

Department Store Rebranding Remember, earlier on when we spoke about consumers spending money on experiences? Shopping in department stores is mundane and it does not get the pulse rising. Part of department store rebranding is to revitalize the experience and make it deeply personal.

It’s especially problematic for women. There is more selection and yet more difficulty in finding clothes that both fit and are appealing.

Men walk into a store, know their inseam, waist, arm and neck sizes and, voila, there is a suit. As a result, men are free to purchase based on the look, style, price and brand. They find what is available in their size and they buy it. Minor alterations are acceptable and easy to accomplish. Many times, off the rack is a real phenomenon.

Department Store Rebranding
The problems at Macy’s are systematic of the retail space.

Women shop on size and department, which varies by store and by brand. Go into a Macy’s, for instance, and find a size 4 that’s a size 2 at another department store. It’s even worse than that. Shoppers shop in that same Macy’s, find a size 2 that fits and another size 2 that doesn’t.

That variation in experience is confusing and…dull. Women look at overcrowded and jammed racks in poorly set up departments. And all this to find a garment that appeals to them aesthetically.

As a result they are forced to search the jammed racks for that design or style in their size – even though they know that label size is no guarantee of proper fitting. This means they try on everything and sort through all sorts of retail disappointment. This is not an experience. It is a nightmare.

That’s not shopping, either. It does not translate into purchases. That’s solving the Pythagorean theorem.

An example of rethinking everything at department stores.

Department Store Rebranding Large department stores must rethink everything, from their brand to their operations to really rebrand effectively. Rethink the in-store experience. Attract more women shoppers. REAL preference is job number one.

Ladies apparel is a $225 billion business; so preference, not just dropping in, is immensely profitable and increases relevancy in a dying industry. It is optimal to make the department store the destination. And not just for Christmas.

Is the solution transitioning to on-line?

That still raises important business facts. Department stores own large amounts of real estate. They have expensive long-term leases. What does it do to profitability if the great department store chains are forced to retreat and rely on web sales only?
Can they survive that sort of apocalypse? There is another answer. There has to be.

Department Store Rebranding and AmazonIf the Amazon model IS the future then bankruptcy and chapter 11 is the interim step to treading water and waiting for the merciful euthanasia. Any numbskull can suggest the move to on-line sales.

The problem is it won’t work with the current structures. Department stores desperately need an answer that lets them protect the brick and mortar investments that revitalizes shoppers today and in the future.

Success leaves clues. Shoe department retailing.

Department Store Rebranding
Shoe departments hold the clues to success

So back to the problem of finding the right fit. That is not a problem when shoppers shop for shoes or handbags. Consumers easily see what’s offered without the clutter, find the style they like in the right size and are off with it.

Shoe sizes are universal. The shopping experience is positive. Shoes are displayed on roomy racks and displays and the shopper scans all the shoes (including style, color and form) and then the shoe salesperson bring the shopper the shoes in their size.

Funny how simple it is. How civilized the experience, despite being in the morass of other crowded and jammed departments of clothing.

Department Store Rebranding Why can’t women’s apparel be like that? Department stores rebranding is possible building on that successful model.

Rebranding requires retailers to rethink their stores operations and how technology is utilized. Sadly, the highest level of technology in retail today is a copy of Amazon’s model. Order online and pick up.

But apparel is a different animal, especially in women’s apparel. The sizing of women’s garments is useless. A standard that unifies sizing everywhere sounds like the big answer. Is it?

Yes, absolutely. The sheer amount of returns because clothing does not fit is an issue for Amazon too. There is no regulatory agency to govern sizing so that changes takes real effort from the industry.

Use digital tailoring software. Make the experience personal.

Department Store Rebranding Instead, we recommend retailers of women’s apparel adopt the sizing structure that works in the shoe department model. That is, just use measurements. Display style samples and have sizes in the back warehouse.

Even that is unmanageable because women, unlike men, don’t share a basic shape.

However, the playing field changes as shoppers provide a profile of their exact measurements. Can high-end apparel stores  digitally measure the consumer and privately store those measurements in a private file? Of course they can.

Is it then possible to alter custom fit clothes to their specifications? Yes, but that is not the best model. Executing that on a mass scale so a Macy’s or Dillard’s use it is a challenge.

Department stores can afford to automate it. Do it digitally.

As a customer visits your store for the first time, direct them to a private dressing room and digitally scan their measurements. Their exact measurements are stored in their personal and branded app.

Department Store Rebranding
Use technology to customize customer service

As customers shop in the newly designed departments with newly redefined department titles based upon lifestyle rather than the traditional Juniors, Petite etc., departments.  Shoppers can look at every offering, all displayed in a size 4. They now shop by cut, fabric, color, brand and style. Not size because only one size needs to be on display (just like the shoe department model we discussed earlier).

The convenience of their smart phone is utilized, They scan the code of the item of interest and the app stores the choice. The store is no longer jammed with every offering in every size. The result? The branded experience of shopping is civilized.

The racks are not crowded and the styles themselves are highlighted. The retailers use their merchandising skills to highlight offering. Suddenly, there are sight lines in the department store and an opportunity for the retailer to practice their skill at displaying wares and merchandising.

How it benefits you.

Department Store Rebranding
High-End stores have the right merchandising model

Here’s how this complete department store rebranding works. Simplify the offerings on the store floor much like high-end retailers. Customers actually see the garments in lengthy and leisurely glance. Consumers develop a digital profile on their measurements that is part of the retailers database. Because you know them and they now know you, a relationship is established.

When they return to the department store, consumers open the app to say they are in the store and what, in general, they are looking for.

Department Store Rebranding If the garments are bar coded by actual measurements, then a warehouse employee gathers those garments in real time from the back warehouse (remember the shoe model) that actually fit that customer.

When shopping is done, the shopper tells the app and are assigned a dressing room. The promise is that, in 10 minutes, everything they scanned will be in their dressing room and in their size.

Better yet, customers could use the app to say they are coming to the store and to get their personal rack ready and pre-placed in a dressing room.

Think about this. If implemented, it creates a preference for the department store brand (which reflects the change in the retail experience) and a database is established to enable more effective buys from designers and better PERSONALIZED service (read how affinity programs fail here). The customer chooses if they want the clothing in the dressing room or if they require human assistance.

The newly branded department store experience.

Department Store Rebranding
It is about the experience of shopping

The new experience reconfigures the department store experience and decreases the display space and increases the warehousing. It requires an investment in logistics and warehouse systems.

But the new department store is now an adventure in experience and we know that customers covet that. The department store rebranding process combined with new thinking provides new preference.

Think it’s not possible? Amazon can do it, and Amazon is the retailer that terrifies the rest of the industry. The online retail giant, who just announced plans to open brick and mortar stores, is threatening to take over the entire industry while its players stand still and watch.

Amazon transports product anywhere in the world overnight. Is a tight logistics system that creates in-store logistics providing results in 15 minutes impossible? Believe that and you are doomed.

The future in department store rebranding is in personalized automation.

Department Store Rebranding All it takes is an automated, software system that makes it easy to find the right clothes at the right time from your warehouse space. It, therefore, allows the shopper to buy and shop based on taste, style and color, just like they do with shoes and handbags. It means sales improve because shoppers see the entire inventory.

Plus, in the spirit of discovery, the store adds a few surprises— a few alternatives for that shopper based upon the customer profile and design preference. All of this accomplished by an algorithm.

Department stores, don’t get caught up in — “That can’t be done.”

Department Store Rebranding Change or die. That’s the simple truth. This is just one idea. The point is that department store retailers, whether they are in apparel or not— let go of age-old habits. Dead brands are full of leaders who once said, “That can’t be done.”

Department store retailers must do two things. 1) Consider a total rebrand because few retailers position the brands against the competition and as a result are not meaningful enough to target audiences. (Here’s how we rebrand for our clients.)

2) Rethink everything. Ask the right questions in brand research that goes beyond simple usage and attitudes. The current model is a rapidly dying one. And given the current trajectory, there will only be room for one of the major department stores.

There is a third strategy retailers can adopt (and many are). Do nothing and watch Amazon destroy your business. But, as in most things, victory belongs to the first mover.

 

Read more about the retail market and department stores here:

Amazon and Black Friday

Macy’s loses importance

Another retail casualty the CEO of Stein Mart

Macy’s National Hiring Day

Macy’s should have known better

Which retailers will survive?

Retail in a nutshell

The blinding of Sears and JC Penny

Brookstone needs rebranding

Staples is not fixed

Promotions and Millennials

Bad experiences at Best Buy

Why Sports Authority Died

What about Black Friday?

Amazon Prime Day 

Here are some articles and blogs on REBRANDING

Rebranding GlenGuard

Grocery Rebranding and Amazon

Rebranding of Mastercard

Rebranding Electrolux

Rebranding is all about mindset

Rebranding Steven Colbert

Rebranding Constantly

Stealing Share. Rebranding Experts.

Choosing a rebranding company. The rules.

Rebranding Newspapers. Finding new importance

Analyzing a brand for rebranding opportunities

Amazon Black Friday won’t kill the day

Normally, I appreciate most of what Amazon does. The brand has a well thought out and executed brand strategy, with most of its moves being a reflection of that strategy. Retailers may not like what Amazon does but they are trying to copy it, if not improve on it.

Amazon Black Friday
Amazon Black Friday is a tad redundant.

With 54 shopping days left until Christmas, Amazon has unilaterally declared the days from today until Black Friday as the Countdown to Black Friday. Further, Amazon has decided that it will continue its Black Friday sales until December 22, extending the made up retailing holiday over the course of two months.

But the real savings are not scheduled to start until after Veteran’s Day. The crazy bash-the-door-down markdowns won’t hit the virtual shelves until the week of Thanksgiving.

But don’t worry, retailers, the Amazon Black Friday era did not just kill the supposed holiday.

What Amazon Black Friday is intended to achieve.

Amazon Black Friday is an attempt to prompt shopper to no longer wait for local brick and mortar or even online shop to have its own event. Amazon Black Friday is intended to make you purchase today what you would have bought immediately after Thanksgiving.

However, I am not all together sure that it will actually keep people out of stores. For some, Amazon purchases will just be spread out a bit more over the 54 shopping days left. They won’t necessarily be made today.

Personally, I think that most people who shop on Black Friday simply do it for the sport of it. It’s the experience of it. The game for Amazon should be to change a behavior and that behavior won’t change with a simple promotion. Retailers need Black Friday. So as long as they open up at 2am with $210 TVs, there will always be people willing to wait in a line that circles a city block for a chance to get one.

Why this is redundant.

Amazon will have a degree of success with this promotion, but it alone will not kill Black Friday. Consumers have been shifting their purchasing from traditional brick and mortar to online anyway. But it will be difficult for Amazon to say exactly what percentage of sales increases were due to the promotion versus which ones that would have happened anyway.

The real numbers will show up when Amazon releases profit numbers for the quarter. Extending the season requires additional resources, remember, and cost money.

At the end of the day, this promotion will do little to change human behavior. That’s the highly sought-after effect from any promotion. People will still wait in line, knock down doors and trample over one and other to be the first one to get the latest Furby, gaming console or pet rock.

So I say bah humbug, Amazon, you just made an already insufferable shopping season longer.

Retail Market Study. A study of the retail space

A Retail Market Study of the Retail Space

The Retail Market by Tom Dougherty

This retail market study will look at the retail market as it stands today and the art of retail branding. We will look at the competitive positioning, brand promises, segmentation strategies and the influx of online retailing.

More importantly, we wanted to see what the trends are. Where is the retail market heading? And, with news of poor sales and store closings, where can retailers go from here? (Read a brand new article that details department store rebranding strategy here)

Let’s begin by looking back because we can learn from it.

History of Retail Branding

Today’s retail market is in the midst of great changes. The current competitive set is under fierce competition from new and emerging venues. Yesterday’s winners may be losers today as the brands seek importance and place in the shifting sands of retail expression.

Retail branding is both fashion and marketing
The retail space

This dynamic of change is not a new occurrence in retail. Like the ancient city of Pompeii and the modern city of Napoli, retailers live next to a snoozing volcano of transformation. This volcanic giant erupts at historical intervals and its pyroclastic flow and unstoppable sea of lava changes the landscape in a flash of the eye. It leaves former populations stranded, frozen in time, and builds new terrains for the lucky survivors.

More than 200 years ago, populations were centered within metropolitan areas. Suburban living was rare and rural residents made their way to nearby cities when purchases were needed. Back then, required clothing was either unable to be made and/or unavailable in the general store. Those residents of cities and metropolitan areas shopped in retail districts, often defined by the type of product that was available. There were streets and avenues that were known colloquially as the shoe district, milliner district, haberdashers and others.

Like the advent of supermarkets in food retailing, where various store fronts were brought together under one roof (i.e. green grocer and butcher shop), convenience drove the birth of the department store. These eponymous mega-stores brought the shingles of merchants together in one place. Suddenly, it was possible to shop for hats, shoes, dresses, and outerwear all in one place. The lucky city shopper was able to save time as well as sample all the finest and utilitarian goods available.

This retail market was a global phenomenon. In Britain, Kendals, Harrods, Selfridge, Baimbridge and others took hold. As the space moved towards this powerful market economy, department stores arrived all over the European continent. Le Bon Marché, Karstadt, Magasin and countless others — each representing the needs of the local population.

In the US, retail giants took root and Gimbels, Macy’s, John Wanamaker, Lit Brothers, Strawbridge and Clothier, Lord & Taylor, Marshal Fields, Frederick and Nelson began. Many never morphed into chain stores. Marble Palace, in New York, was one of the first department sores.

As the population shifted to the suburbs from the 1940s and 50s, these large department stores opened chain stores in larger markets. Sears Roebuck and Montgomery Ward were the equivalent of Amazon today. They allowed for home shopping from catalogs for the most rural customers because it was a department store in a book. These not only brought all the departments under one roof, their more efficient buying power enabled them to offer pricing that put additional pressures on small specialty retailers.

Retail branding lacks the most important differentiating messages
Retail Marketers Lack Important messaging

As a result, cities all over the globe saw more and more independent specialty stores shutter their windows and close. The department store appeared to be an irresistible source.

Eventually, it seemed that every major city had a string of independent department stores. Check out the listing for now defunct department stores on Wikipedia, for example. The brands number into the hundreds.

About 20-30 years ago, there was a great consolidation of brands as holding companies like Mays and Federated swallowed up local stores. In some instances, the new store brand names were consolidated to just a handful. Eventually, great legacy stores like Hecht’s, Wannamaker’s, Strawbridge, Bamberger’s and others went the way of the Studebaker and either closed or became branded as one of the winners — like Macy’s.

The first real challenge in the retail market to department store dominance was from the value institutions. Two Guys, EJ Korvettes, WT Grants, Kressge, Kress, Woolworths Kmart, Clover, Aimes, Bradlees, Jamesway, McCrory, and others appeared. They siphoned off the value shoppers from the major main line department stores. Those stores today are represented by Target, Wal-mart and Kmart.

In the traditional department store model, retailers counted on the efficiency of a one-stop shopping experience. But they also quickly understood shopping as a recreational experience. Put simply, they accepted that shopping was for fun as well as utility. What these stores were doing was selling an experience. Lavish first floors, escalators, elevators, balconies, and also marble and imported features, raised the experience to the level of theatre.

From the siege of discount department stores mentioned earlier, the main line department stores learned the value of loss leaders and clearance sales. Part of the entertainment value was certainly the thrill of the hunt. The department stores heads quickly learned that, at certain price points, even the most experienced shopper was willing to buy something they did not really need. Why? Because the price was simply too good to pass up.

Today, in the retail market world, new pressures have arrived. Specialty stores are on the rise again because shoppers are looking for the unique and unusual. Population centers have expanded and almost every community can support a mall (that is, a centralized design predicated upon the idea that a city shopping experience could be brought to any community) and a discount retailer like Wal-Mart, Kmart, and Target. But margins have eroded, discounting has become the norm, shoppers are savvier and the availability of online purchasing can fulfill the needs of the shopper. The thrill of the hunt can reside on your tablet or phone and when the shopper visits the department store they are aware of pricing and compare it to an online venue or a competitors web site live — even while in the store itself.

It is within this cobbled environment that we begin our retail market study. What does the future hold? How can any retail environment survive when most retailers are simply copying one another? At the end of the day, is price, discounting, and over-saturating the market the only game necessary playing? Are the department store websites eating their own young? These are just some of the many questions we will be contemplating through the course of this study.

A Snapshot of the Retail Market

As we’ve explained, the retail industry is amuck . Changes are afoot that retailers are having difficulty dealing with. We’ve seen Radio Shack, Barnes & Noble, Office Depot, Sears, Staples and Toys “R” Us close locations for a variety of reasons.

The entire retail market is so vast, we are going to concentrate on the apparel market. But even the apparel market sees retailers close locations, with J.C. Penney announcing 33 store closings by May and Abercrombie & Fitch to close 180 stores by 2015.

Like their retail brethren, the apparel retailers are in this pinch because they lack differentiation and their business models are outdated in a world of sea changes.

To begin, let’s map out how the retail market positions in the retail market itself. In the graphic below, you see the luxury retail markets (the Bergdorf Goodman and Von Maur’s of the world) existing on the top. This high-end section can blur into our middle-tiered players (department and specialty stores: Belk, Macy’s and GAP, for instance). The middle-tiered players blend into the value and discount retail providers (such as Wal-Mart and TJ Maxx).

 

The retail market space and retail branding
A detailed strategic chart of the retail market

The shoppers at Bergdorf Goodman would rarely go into Wal-Mart, and vice versa. The middle was intended to play to all shoppers.

In this paradigm, and because of their polar positions, luxury retailers and discount stores already come with a built-in audience. Those shoppers seeking exclusivity for the privileged and top designer fashion will frequent the high-end markets, while those seeking a value will hit the discount shop.

For example, Bergdorf Goodman offers a uniquely exquisite shopping experience. The store is uncluttered and displays recognizable products for the upper class.

In this region of the retail market, the shopper is readily defined and is willing to spend major bucks on the finest brands, quite happily. High-end stores represent a vision of either how they see themselves (elite) or how they aspire to see themselves.

The lowest sector of our retail market segment represents discount and value markets. It, like the luxury sector, also has a built-in set of loyal customers. Represented here are those seeking value, perhaps quantity, and locations close to home. (They, also like the high-end shopper, may seem themselves as smarter than the rest.)

Wal-Mart rules this portion of the market. The customer knows exactly what they will find at Wal-Mart, approximately how much they’ll spend, and can plan accordingly with their wallets. Same too with TJ Maxx, which offers fashionable brands at discounted prices, as well as Target and others positioned in this section.

This then leaves the largest portion of the retail market in and around the middle. Here we find department and specialty stores lurking about, but without any real defining factors that separate them from the other contenders – including those above and below them in this matrix.

Here’s the mess of what happening in the retail market

(Here is an article from the Chicago Sun Times about retail sales in November 2015) In this realm, the department store aims to steal market share from both the luxury and discount category. The lunacy in that is the only way these stores can gain market share is by way of discounting merchandise and building store locations nearby. That’s all.

Dillard's retail brandingLet’s take Dillard’s, for instance. When this department store comes to mind, we might think: “a bit upscale.” Maybe something along the lines of a Bon-Ton, but a little bit nicer. While that’s the thought, the message it advertises is quite murky. Dillard’s is marketing a preposterous mix of high fashion infused with heavy discounting and sales.

Basically, it is trying to be both luxury and discount. In that case, if you prefer luxury, you ignore Dillard’s because the luxury stores are right there next to it. If you prefer discount, you ignore Dillard’s because the discount stores are right there too. When you try to be everything to everybody, you end up being for nobody. You are undefined.

What this tells us is that Dillard’s (like any other department store that faces the same dilemma in the retail market) hasn’t found any singular means to identify itself, so it copies and hopes to steal a few customers from the high-end and low-end shops. It offers high-end fashion as a way to snag shoppers who may frequent the luxury stores (but that won’t work since the luxury shopper seeks experience), but also plays against the discount category by offering blowout sales throughout the year. Even Macy’s seems stuck in a world of tactics. Take a look at this Macy’s commercial from Black Friday 2015. All it demonstrates is no new ideas in the retail market.

Macy’s Black Friday Commercial

How about JC Penney as another example? Like Dillard’s, at JC’s we find some major brand names being offered for the shopper seeking a good sale. Our problem again is the need for the department store to pull from the luxury and value segment.

JC Penny retail brandingWhen JC Penney hired Ron Johnson a few years, it sensed the terrible trap it found itself. Johnson, the former retail chief for Apple, decided JC Penney was no longer going to offer discounted items. He, based on his experience at Apple, wanted to build a brand that shoppers sought out – even if they could get those items cheaper elsewhere.

With less than two years on the job, Johnson was fired by the JC Penney Board of Directors as the company lost $4.3 billion in sales and dropped 28.4% in holiday sales.

The problem JC Penney and Johnson faced is the same problem department stores are facing how. They are playing in the middle of the retail market and lack any kind of credible, singular identity.

To gain that identity, and steal share, these middle-tier retailers must become owners of a tangible concept. On a macro level, luxury and discount do this with experience and value. But on a micro level, nobody but Wal-Mart really owns cheap.

To break away from the set and highlight yourself as being different and better, each player within each segment must become known for something that is uniquely its own.

In simple terms, you must be known for something. Right now, the stores playing in the middle – trying to have a foot in one end and the other – are known for nothing. The high-end and discount stores (not to mention online outlets like Amazon) are pulling customers from them.

This is why JC Penney continues to struggle. It is playing a game in which what it offers is better served in other areas of the retail spectrum. JC Penney and those like it need to change its brand and business model.

Discount Stores

When we look into the abyss of discount stores in the retail market, we can basically see one big winner and a whole lot of second-rate copycats.

Here’s the gist of the problem with the category. Wal-Mart has taken claim of a unique position and isn’t moving anywhere. It owns affordability and has become the destination for the shopper who wants it all under one roof — at a fraction of the cost.

Brands like Target (Read why Target needs repositioning) try so hard to be like Wal-Mart that they even sound like the low-cost retailer. Take Target’s theme, “Expect more. Pay less.” and Wal-Mart’s, “Save money. Live Better.” If we are to draw a line in the sand, the leader (Wal-Mart) is always going to be the winner. It is the consumer’s default choice. How is Target going to beat the competition if it is just copying what the competition does?

From the inside-out perspective of the stores themselves, the difference between Target and Wal-Mart is simple. Wal-Mart brands for everyman, while Target attempts to pinpoint an audience a bit younger, more educated, hip and affluent.
We’re here to tell you it isn’t working.

Target. Retail BrandingTarget is just doing what Wal-Mart has done. There isn’t any mark of differentiation between the two in reality. For example, the same Apple products are offered at both. Food, and clothing, too.

So, how will Target ever win if it is doing the exact same thing the market leader is doing? It won’t. In the race to attract the discount shopper, copying the market leader always leads to second place or worse. That’s because when the reasons to choose are the same, the default choice is always the market leader.

Meanwhile, way, way off in the distance from successful Wal-Mart and semi-successful Target is Kmart.

In 2005, Kmart was taken on by the fumbling, Sears Holding Corporation. Following that came a series of failures: losing the Martha Stewart Living line in 2009 following comments made by Stewart that Kmart had “deteriorated” since merging with Sears (funny thing: she was right). Several years later, after dismal holiday sales, 100 Sears/Kmart stores closed.

Failure came to Kmart as a result of promising exclusivity of its product line. As an idea, that seemed right. But not when the Kmart brand itself is identified as downscale.

In some ways, this is about brand permission. When Kmart had an exclusive with the Martha Stewart line, the Martha Stewart brand suffered – meaning the exclusivity of it became meaningless. It is the Kmart brand itself that hampers sales, not what it offers. (It seems Kmart has yet to learn that. It now trots out the Adam Levine line.)

No celebrity line will work until Kmart fixes its own brand. It is definitely in need of brand repair.

TJ Maxx, Stein Mart and their shortcomings

The T.J. Maxx and Marshalls brands, owned by the TJX Company, appeal to shoppers seeking to save big bucks on big name brands. “If [it] says, ‘We like this $40 shirt you’re selling at Macy’s, but we want to retail for $22. We don’t need lining and we could use cheaper buttons.’ [it] will get what it asks because it will place an order for two million,” shared Howard Davidowitz, chair of the retail-consulting firm Davidowitz & Associates.

T.J. Maxx and Marshalls retail brandingTJX now sports over 3,000 retail stores nationwide (a total which also includes the furniture brand, HomeGoods). However, just because it has a lot of stores and sales are up doesn’t mean the prognosis is good. TJX’s game plan to oversaturate the market with stores might be good for short-term sales figures, but that doesn’t build preference.

What does make the TJX companies different is its specialty products section. Unique to the smaller discount stores is the garage sale of goods in the back of every TJX store, where you can find name brand kitchen and home goods.

Remember this: distinct sections like these drive people into a store because they provide an experience unlike any other. At a TJ’s, you can get clothes for cheap, but you come for the cool stuff in the back.

Stein Mart, meanwhile, brands itself as an upscale boutique. We’re not entirely sure they are that, however. The theme of “More fashion, less price” is basically the mirror of T.J.’s, Marshalls, or Ross (“Dress for Less’) for that matter.
Their website offers all sorts of after holiday deals: “Save an extra 30% off” and “Red Dot Clearance” litter the site. Not exactly the upscale boutique feel, is its

Stein Mart still plays in the same area as its competitors – Brand clothes for less price. Playing in that area is not the problem. There is a tremendous market for that shopper, but being the same as the competition means you are not preferred.

 

Thinking discount as a whole for the retail market

Let’s call the discount store category what it is — a sea of nondescript imitators.

Right now, nobody stands for anything other than price. That’s it. The huge problem is that Wal-Mart solely owns the position of being cheap. So everyone else loses by playing the price game, too.

Even with the brand discounters, like Stein Mart, offering you a great 30%-off deal, it is basically telling you, “We have no identity worth sharing, but come buy our stuff anyhow because it’s cheap.” When Target copies Wal-Mart’s tagline, it is because it’s gasping for air too.

It’s high time these brands grew up. Or some of them are going to be gone.

These stores must own something beyond price, because Wal-Mart already owns it. The idea is to own something emotionally that gives consumers a reason to prefer you, the same way a pickup driver may describe himself as a Ford man.

Tactically, though, these retailers can be known for something that no one else has, such as gift giving. (And if you uncover the emotional reasons why gift giving is important, then you really have something.)

What if Target (or someone) added a “Great Gifts for Everyone” section in its stores? This could be a place where you could always find interesting, Target-selected goods that are perfect as a presents. Suddenly, Target now owns “Gift Giving,” which brings customers to the store. (Again, the emotional undercurrents of gift giving are what will make the brand.)

This section wouldn’t simply be like all the other sections in the Target store (clothing, home, electronics, etc.), but an entity unto itself. Perhaps it’s a separate room, with different lighting and style, even music. Target could hire specialists for this section — masters of giving great gifts, with a history of doing so. Store demonstrations and talks could be given.

Forget playing the price war. Sell this concept.

Change has to happen soon in this category or demise is afoot.

Specialty Shops

If you consider all the specialty shops stationed all across the US, which sector would you say does this:

• Owns an event that happens more than two million times per year
• Is part of a $40 billion industry
• Includes nearly 10,000 individual shops

What category would that be?

It would be bridal salons, from the biggest (David’s Bridal, Bridal Warehouse) to the local shops to the luxury ones you see on reality TV. They have managed to own an event, get customers to pay for an expensive dress they will only use once (the brides hope) and hunt all over to find the perfect one.

The shops are all in the considered set (within the realities of access). They all stand for something. And many of them even have preference, most notably because of past experience.

Why can’t the rest of the specialty shop market follow suit?

At first glance, it looks like many are, segmenting the market to own something. Urban Outfitters, Gap and Abercrombie & Fitch are for the young & hip. L.L. Bean and Eddie Bauer are for those who treasure the outdoors. Men’s Warehouse and Jos. A. Bank are for the formal male (at a good price) and these two have merged.

However, most of what they (and others) offer can be found elsewhere. Let’s recap a few of the players in specialty, and then examine what strategies they can employ to take more important ownership as bridal shops do.

Urban Outfitters

Urban Outfitters retail brandingUrban Outfitters aims to attract the young and hip of those among us. That’s fine as it goes. But as we’ll see, Urban Outfitters is not alone in trying to attract this audience. It has a cool, free-living factor. Even its “Lighten Up” message suggests that. And it takes a stab at promoting what it deems is its unique fashion.

As a holding company (Urban Outfitters also owns Anthropologie and Free People) it’s done well, but the Urban Outfitters stores are not growing as quickly as its other brands with net sales dropping. Urban Outfitters, as a brand, is so dependent on “trendy” that its performance fluctuates.

Keep that in mind. If you are “trendy,” then you might hit the game-winner every now and then, but you will also shoot an air ball. For long-term health, you need a consistent offense.

Gap

The first thing you notice here is that Gap is no longer The Gap. The “the” has been eliminated. Long the go-to place for young, hip fashion, Gap is facing more competition and, therefore, less market share.

Gap retail brandingThe recent holiday season was a mixed bag for Gap, as sales soared on Black Friday but the retailer found customers less interested by December. Gap is doing better than the other two brands it owns (Banana Republic and Old Navy), but there are still problems.

Its marketing looks all the same as its competitors. If the Gap logo didn’t appear at the end, you wouldn’t be able to identify who the ad is for. They’re just so similar to what Urban Outfitters (and others) do.

Abercrombie & Fitch

Huffington Post recently released a list of nine brands that could be dead soon (its words) and, lo and behold, there was Abercrombie & Fitch. It cited a lack of variety among its clothes and high prices. Those may well be among the reasons, but it’s more than that.

You might remember A&F CEO Mike Jeffries’ comments last year that drew some Internet outrage. He said A&F was only for the “cool kids” and “only interested in people with washboard stomachs.” There’s more, but you get the drift.

Abercrombie & Fitch retail brandingNow, customers aren’t ignoring Abercrombie & Fitch simply out of protest to what Jeffries said. No, the reason is because, as a brand, A&F absolutely does think that way.

As we’ve seen, there’s simply nothing special about that kind of approach. It’s what everyone else is doing, and there’s something irritating about the A&F approach. It’s over the top in the washboard category. It’s a brand that’s trying too hard and it shows.

Not to belabor the point, let’s point out that there are others holding in a similar pattern, whether you’re talking about J. Crew or even Banana Republic, and move on.

The others

There are other ways to segment the market. Many shops do speak to a specific lifestyle but only one seems to do something other than the blatantly obvious. That would be Lane Bryant.

Lane Bryant took some heat for its sexy TV spot, which is silly. In an era in which Victoria’s Secret is splashed all over the airways and Miley Cyrus is twerking, this approach isn’t so taboo. In fact, it delves into a deep, emotional belief that Mr. Jeffries of A&F has misconstrued: If I don’t have washboard abs, am I still sexy?

LaneBryant retail brandingLane Bryant is saying that you can be – and it’s working. Owned by Ascena Retail Group, Lane Bryant’s year-to-year, comparable sales in November and December increased by 13%. That’s impressive given that holiday sales were generally down for retailers. (Check out this blog with our comments on a Lane Bryant advertising campaign)

Meanwhile, the outdoor enthusiasts of L.L. Bean and Eddie Bauer have certainly found a stake in the ground, but they execute it in the most obvious way. Therefore, it’s not all that emotional or important.

One of the more interesting corners of the specialty retail market is men’s wear – specifically, the situations surrounding Men’s Wearhouse and Jos. A. Bank. The two retailers have been battling each other for years and it was nastiest before the merger.

In fact, Jos. A. Bank is being purchased by Men’s Wearhouse, ending a feud that was bloody. It even took out a founder.

Men's Wearhouse retail brandingThe board of Men’s Wearhouse fired George Zimmer – and you all should know him. He’s the one with the gravely voice and beard that says, “You’re gonna like the way you look. I guarantee it.” The board believed the brand was too much about him and not about the products.

That’s true, but the new direction is blending into what other retailers are doing. You could say Men’s Wearhouse is becoming for those men who are young and hip. Sound familiar?

How to Win in the Retail Market

Before we take a look at what specialty shops can learn from the bridal salons, let’s take a step back and look at the apparel retail market as a whole.

As explained earlier in this study, retailers have mapped out a matrix in which consumers can decide where to go. There is the men-women line, intersected with the luxury-discount one. Consumers place themselves in the retail market as defined by the retailers.

The specialty shops sit over by the side. In general, they are more toward women and straddle the middle of luxury-discount. That is, they are in competition with the department stores.

Retail market study
The Retail Market in Flux

Department stores are in predicament. They are so undifferentiated that there is no self-identification. They are not luxury. They are not discount. They are not specifically for men. They are not specifically for women.

Within the specialty shop space of the retail market, there is the same matrix and you’d find most in the middle, with a slight edge to the female side because most of fashion resides over there.

At the moment, most specialty shops define themselves by a style. A consumer chooses, theoretically, by that style.

But what happens when that style is available at many locations?

The solution: Be known for something that no one is known for. For that reason, it might behoove specialty shops to first consider where they stand on the luxury-discount scale.

That’s because most are in the middle, but there’s a certain advantage to being one or another. If you are high-end luxury (like, say, Saks Fifth Avenue), you know your customers are rarely, if ever, going to dip into the low-end, discount pool of Wal-Mart for clothes.

By the same token, those who primarily shop at Wal-Mart would not go online and look for clothes at Bergdorf Goodman. Much of that is economics, of course, but there are also two completely different emotional drivers for each segment. The luxury shoppers see themselves as always wanting the best; the clothes and accessories are representations of being elite.

The discount shoppers, meanwhile, see themselves as smart. They believe those luxury shoppers are being railroaded into thinking it’s more important to have the most expensive dress compared to discount shoppers who believe their money is best used elsewhere.

Therefore, the first step the specialty stores need to take is to position themselves on the luxury-discount line. If they stay in the middle, then they will continue to find declining sales as department stores play there as does online shopping. (You can always find what you want for a good price online, the thinking goes.)

Reatil branding is stuck in the category paradigm
Look outside the category for solutions

The next step, and the most important one, is to own something. Right now, retailers are trying to own men’s clothes, young and hip, or outdoors. Young and hip, while having a relationship to fashion, is a cliché and, by itself, not that meaningful. Other demographics, like male or female, are simply reflections of what you offer.

Instead, you should own the reasons why your customers want to be young and hip, you would own an emotion.

Quantitative research would also determine what else you could own that is different – and more meaningful – than what the rest of the market is attempting to own.

That’s where you look to the bridal shops. They absolutely own something. An event. A season. A milestone. This sounds like more segmenting, but it’s really about positioning yourself against the competition that you are different and better.

For the men’s stores, for example, why couldn’t they own when you get that first professional job? The retailers would fear that that tactic would shrink your audience, but not really. If the emotional stakes are highlighted (you’ve made it), then your approach reached deeper and across more of the market.

Specialty shops are simply not that special anymore. They are lost in a quagmire of choices where everything blends into another. When that happens, sales fall short of expectations, stores are closed and irrelevancy sets in.

The Retail Market Summary

The current players in the retail market are in trouble. Sales are down, consolidation is the name of the game and competition lurks everywhere. Retailers aren’t helping themselves by producing the same, worn-out messages that depend on sales and clichés.

The retail numbers reflect that. While consumer spending rose .4% in January, the apparel retailers didn’t do so well. The industry is reporting weak sales in January, coming off a lackluster return during the holiday season as sales fell 14.6% on same-store sales industry wide.

The retail market and the retailers themselves are in full spin mode in discussing these two periods, saying the holiday season was shorter than in past years and that bad weather (especially on the population-heavy East Coast) kept buyers home.

Sure, those are factors but individual brands are suffering. Kohl’s reported a 2% drop in same-store sales, while Stein Mart had a .7% drop. Where are all the shoppers going?

To the Internet. Specifically, Amazon.

Amazon retail brandingThe Internet giant’s annual revenue has spiked each year, with total revenues expected to be reported at $75 billion for 2013.

Here’s what is strange: Amazon does not turn a profit, yet its stock is at record highs. In essence, what Amazon is doing – and what investors are counting on – is gobbling up more and more market share. To Amazon, the potential size of its market share is limitless.

And who is Amazon stealing market share from? Retailers, of course. The ones with brick and mortar stores, and their own e-commerce sites that can’t even begin to compete with the vastness of Amazon.

On-line shopping

The retail market is changing, although at a far slower pace than how the customer is changing. Retail stores are not the destinations they once were as none of them can compete with the size of inventory the Internet offers.

The Internet, especially Amazon, has other advantages. It owns ease of use and even bargain shoppers can hunt down a sale through it. It can handle orders from across – and to – the world.

Amazon Home page retail market study
Amazon is rewriting the retail market space. On-line Shopping.

This is the truth. There’s simply no logical reason to go to a retail outlet in today’s technological world.

If retailers continue down their current path, here’s what will happen. The pace of closing stores will increase. We’ve already seen recently that Staples is closing 225 stores, RadioShack is shutting down 1,100 and so many others are bleeding money.

To turn a profit, retailers will close so many stores they will become irrelevant and become simply suppliers to large retail sites (Amazon, Wal-Mart). Or they will become the equivalent of a local specialty shop.

Amazon will continue to grow and retail brands will market their offerings as “available at Amazon.” CEOs will be fired. Companies will downsize and consumers will become even less interested in the brands themselves. All that will matter will be price, look and fit.

There will be further consolation as companies look to share redundancies, cut costs and increase their market space.

Wearing something from Gap (or any other retailer for that matter) will mean nothing. The department stores will have these huge retail spaces that are empty of customers, especially customers buying product.

Basically, the doomsday scenario.

If you don’t believe it, the evidence is all around you.

Retail study Online retailers
EBAY is an established on-line retailer

That means retailers must make some hard decisions. They must be known for something that goes beyond what they sell and how much they sell it for.

In this retail market study, we have recommended that the department stores become known for a department. We have recommended specialty stores remember that their specialty is not about a style, a brand of clothing or a price. But that their specialty is an event, which could be a season, a type of activity or a point in someone’s life.

Most of all, none of the retailers can continue to blur the lines of definition by spouting the same messages as the rest of the field. They must be truly different and better.

Despite what the retailers say, they are not. The major learning while Stealing Share strategists were looking at the retail market was how much it was full of blaring noise. Everything – from style to messaging to operations – ran together to form a ceaseless blob that consumers are increasingly tuning out.

The differences between retailers are as thin as blades of grass. It may be the most undifferentiated markets we have ever seen. That is why the doomsday scenario is in play for many retail outlets.

Think about this. Only 10 years ago, Gap was the 18th largest retailer in the nation. Last year, it was 33rd. The Sears Holding Company (which owns both Sears and Kmart) saw sales drop 9.2% in 2013. J.C. Penney’s dropped a whopping 24.7%.

We could go on and on. But the future is coming and changes must be made. Take heed. If you don’t, you will lose.

 We have written extensively about the retail market

Sears and Kmart

The Target and Walmart Retailers

 Jos. A Bank and Mens’s Wearhouse a retail merger

Walmart is not invincible 

Retail Market should concentrate on experience

The failure of Radio Shack is a learning for all retailers

Marketing experts are the problem in the retail market

Lessons in retailing

Staples and Office Supply retailers

Retailers lack urgency

Value Propositions. A look at the retail market.