Over the past month, The Limited announced it is closing all 250 of their retail stores, while Macy’s revealed that it will close 68 stores, and Kohl’s stock plunged on reports of a decrease in sales.
The writing has been on the wall of the mall for years, and the day of reckoning may be here. Big stores with big inventory costs and a small local identity are being passed over.
The big stores’ advantage was the economic benefit of their size, a breadth of selection for their customers, and the uniformity of their brand. Their disadvantage was that they weren’t able to innovate ahead of the transformative events reshaping retail. They generated over 22 million collective likes on Facebook but failed to convert their online marketing efforts into healthy businesses.
Marketing online, these retail giants spent hundreds of millions of dollars on banner ads, retargeting ads, PPC [pay per click], state-of-the-art web sites, and email campaigns that failed to:
- Create memorable experiences for the customers
- Develop emotional or local connections with customers
- Build or develop continued brand loyalty
The winners in this story (besides Amazon) are likely to be small or local businesses. Their size allows them to innovate, disrupt and succeed where the big stores are failing.
A unique voice, memorable experiences and the ability to adapt quickly are advantages that local businesses and entrepreneurs can leverage. The big stores defined their customer by demographic and price point — data points more easily converted into business by Amazon’s logistics. What gets me out of my living room is a memorable in-store experience and a connection or relationship makes me want to shop at a particular store — online or offline.
The mall will continue to evolve as an entertainment destination, but existing or new businesses that innovate, differentiate themselves and build a narrative that connects with the local community will always have a place.
Warby Parker is a good example of how customer service can make an impact for a local business. Few people thought online eyeglasses were the next booming business, but extreme dedication to customer service and branding mean people want to buy Warby Park glasses online and in stores.
They also use social media voice to great effect. At one point, Warby Parker was creating customer response videos where a member of the customer service team personally resolves a customer’s question and then sending those videos to the customer’s social account.
All new Warby Park employees also get a style guide that outlines how employees should write when they email customers or talk to them online. Warby Parker has expanded dramatically in the past several years and local businesses can learn a lot from how this company uses social media to tell its story, connect with customers and provide a great experience.
It’s hard for a local business to create and maintain the unique voices online, and it has created an industry of content marketers who are increasingly important to helping local retailers tell their story online.
The malls will survive and so will innovative entrepreneurs and small-business owners.
For every Macy’s store that closes, 100 entrepreneurs will test new concepts for local retail. The real innovators will thrive. New models will provide better and faster services, and lower inventory expense as well. Experience-based retailers will thrive and great marketers will continue to connect with customers who appreciate having a human interaction.
Yesterday’s retailers will go away. “Too big to fail” doesn’t apply here — no bailouts will come to chain stores that can’t adapt to the changing behaviors of today’s consumers. Today, big stores are failing. Tomorrow represents a huge opportunity for entrepreneurs who embrace innovation — online to off-line connections, creative solutions and a story aimed directly at a targeted group of their most likely consumers.
Innovators will learn from the big-store mistakes and: create a unique and innovative in-store experiences, leverage operating efficiencies of e-commerce with in-store experiences, and dominant social media marketing — delivering the right message that connects with their customers.
Local businesses now have the advantage over big stores of being able to innovate faster.
Netflix replaced Blockbuster because it made life easier and better. Who will fill the shoes of today’s failing mall anchor stores?
David Pachter is cofounder of JumpCrew, a social media, digital and content marketing firm serving small to medium-sized businesses.