April 11th, 2018
Brick and Mortar Crumble: Nine West Files for Bankruptcy
I’m sure that many of you have seen the news this week about the bankruptcy of yet another major retailer – Nine West. This is just further evidence of what happens to companies who fail to adapt to the online shopping revolution. I wish Nine West was an outlier, but unfortunately it seems so many brick and mortar chains are experiencing similar issues due to their inability to properly adapt to the ever-changing economy. The digital age has been brutal for a lot of traditional brick and mortar businesses like Nine West. I also feel bad for everyone who’s careers are wrecked because of this and wish more people would begin to realize the 45-year plan doesn’t really have your best interest at heart! Our CDMO Peter Gold had some great insights to share about this recent bankruptcy news from Nine West, and helps add another great perspective to this story…
A lot of these dynamics have to do with the kind of adjustment that traditional brick and mortar retailers need to go through because some of them — like Macy’s for example — have not done a good job of staying ahead in the ecommerce and digital marketing games. It’s like these retail executives stuck their heads in the sand, hoping that this “ecommerce phase” would somehow blow over, while they continued to execute on stale, out of touch & ineffective business models (including store & footprint expansion). It’s not that e-commerce is so powerful that it’s going to put all traditional brick and mortar retailers out of business; there obviously needs to be a major correction, or an adjustment, where retail/mall developers and traditional brick and mortar retailers look at the e-commerce landscape and say, “Okay, given that this is now a huge part of how people shop, how do we stay competitive? What can we offer that still makes it worthwhile to come in here?” Clearly, the days of “if you build it, they will come” are no longer here.
Many of these traditional retailers have also fallen way behind on providing a top notch digital customer experience to their existing customers while also failing to attract new generations of customers – many of whom do not pay attention to otherwise stalwart brands & instead favor digital only newbies who offer a great digital experience, pricing, convenience & other substantial benefits.
One clear advantage for brick and mortar retailers, specifically those in the luxury space, is what we call the “touch factor.” Trying on a Valentino gown, feeling the weight of a Cartier tennis bracelet on your wrist, climbing into a new Ferrari and smelling the new leather upholstery, etc.….. Those cannot be replicated online (yet). Most consumers don’t mind walking into those high end retailers. They don’t mind being seen in one of those stores; it’s not an inconvenience to them. Those brands have been able to be the one exception where you want to touch it, feel it & be a part of it.