Rajiv Lal, professor of retailing at Harvard Business School, is asking the question that is on everyone’s mind in his recent book, “Retail Revolution: Will Your Brick-and-Mortar Store Survive?”
Cowritten with Harvard senior lecturer José Alvarez and 2012 graduate Dan Greenberg, the book is more business tome than page-turner. But in its 415 pages, “Retail Revolution” faces up to the challenges confronting stores and lands somewhere in between “apocalyptic pronouncements of doom and encouraging hopes that brick-and-mortar retailers are actually more capable of exploiting e-commerce than their pure-play online counterparts.”
Lal and company said retailers have to first identify the threats e-commerce poses to them in particular and understand the individual advantages they have to meet those challenges. Once that’s done, they suggest retailers take one of three paths: wind down, shrink and transform their format or enhance the value of their box.
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The good news is that Lal thinks apparel retailers — at least those with distinctive product — are comparatively well situated to meet the digital challenge. WWD spoke with the professor for a class on what’s around the corner for fashion.
WWD: Are fashion retailers more or less vulnerable to digital destruction than other types of stores?
Rajiv Lal: We don’t think apparel is as effected by the title of the book. In fact, apparel is something which can benefit enormously from the Internet as a complement to your existing channel of distribution. You hear about a whole bunch of Internet-only businesses in the last few years that started to open up stores.
WWD: But apparel retailers are still nervous. How should they be thinking about changes brought on by e-commerce?
R.L.: This is about trying to acquire new customers that do not have the reach of the stores in their community. Then you have the existing customers who’ve tried the brand and love the brand. The Internet engages that customer.
WWD: You write about zombie retailers. What are they and why are they important?
R.L.: There are lots of retailers that are not doing well, but they’re still alive — and not only that, they have nine lives. It takes a long time for these retailers to really go under. In other businesses, consolidation takes place and that sector becomes healthy again. In retail, you have these zombie retailers who are not doing well and then, just to survive, put a lot of price pressure [on the market].
WWD: What happens to malls or strip centers anchored by these zombies?
R.L.: What is important for all this is the A malls. If you are in B malls, you’re going to have problems because as soon as a couple of anchors close, that is going to have a big impact on traffic. And as soon as you have problems with traffic, than every other store [is hurt]. Most malls are saying one way to survive is to become an A mall.