BUILDING NEW RETAIL. PART 1

We are leaving through the very difficult and challenging times. The future of the business especially retail continues to be unknown. Every day brings us news on bankruptcies, loan defaults, and store closings. Watching how all of this unfolds, we are learning more about the financial state of many fashion businesses before the epidemic: During the longest stretch of prosperity, fashion stores gross sales basically were flat with an astonishing drop in EBTIDA meaning that for a lot of stores, department stores in particular; it was a long and painful struggle. No one had any cushion; after being closed for 2 weeks, the stores were looking for short terms loans leveraging their real estate. The big question is: what is the future for department stores? Yes, closing not performing stores would give a little breathing time, but just a little. In the last two week I have listened to many webinars; predictions, read a number of articles and interviews from retail executives. I want to share my thought on it:

Most stores/companies can’t actually verbalize what drives the value of their brands compares to their competition: typically the answer: “unique client experience”, “seamless shopping experience”. The majority of stores truly believe that “engaging their clients is a road to success”. And here we come to the most important question: who is doing it? Sales associates, right? I started my managerial career in the late 1990s; I worked in a major department store in SF for nine years. During this time I lost one employee (she moved to NY). Yes, it was more than 20 years ago and the store was doing amazing. Salesperson's job was prestigious and highly desirable. It was a career for my girls and boys. Last week I spoke to about 10 of my old employees, who are still not retired, they all said the following: “almost all of the high producers are over 50”; “new people (with very few exceptions) don’t stay”. Why??

1.   “Digitally native” have difficulties communicating with clients/strangers. They don’t have enough talking skills. They spend all day on a phone. They are scared of humans

2.   As stores lose traffic, it becomes impossible for a new hire to develop a client base, even if they want to. Clients don’t come any longer because products are wildly available.

If the quality of your sellers is diminishing, how would you build “unique client experience”? Especially in the overheated luxury market we are in?

I will be writing another article shortly sharing my ideas about making luxury exciting again.