Apparel sales are suffering as consumers prefer to spend on experiences instead of clothes. And MasterCard’s November data, which includes Black Friday and Cyber Monday, shows that isn’t changing so far this holiday season.
The three leading spending categories last month were restaurants, furniture and lodging. And a key consumer trend so far this Christmas has been the speed at which shoppers have dropped going to brick-and-mortar stores in favor of e-commerce.
“The big surprise to me has been the huge jump in e-commerce, as we know that many consumers prefer the customer service at brick-and-mortar stores,” said Sarah Quinlan, senior vice president of Market Insights at MasterCard Advisors.
Some retailers are beginning to get the message that the shopping experience has to be upgraded if they’re going to lure consumers in. Sporting goods companies have been the most successful at creating experiential shopping. Bass Pro Shops has created destination stores with archery ranges and fish tanks to test products. In addition, some stores have banquet rooms for groups to use for meetings, which connects the store with the local community. The superstore in Springfield, Mo., houses the National Sporting Arms Museum and the Archery Hall of Fame Museum that draw a tourist crowd.
Activewear brands have tapped into athletic endeavors as a way to create experiences. REI offers adventure travel, North Face supports the Endurance challenge race and Lululemon offers complimentary yoga classes. These types of experiences come easy to activewear brands, but regular fashion struggles to find its sweet spot.
It’s not only the outdoor or active retailers. Sephora has created a try-before-you-buy atmosphere. Ralph Lauren runs restaurants in New York City, Chicago and Paris at its Polo and Ralph Lauren stores. The eateries have an equine aesthetic in keeping with the brand. It also reinforces the lifestyle brand, which in turn helps sales of the licensed home products. Cowen & Co. analyst John Kernan said, “One category that was cited as a positive standout over the [Thanksgiving] weekend was the home category. This could be beneficial for Ralph Lauren and even Burlington, given their home products’ exposure.”
The marriage between apparel and dining is a long tradition that goes back years. Macy’s opened the first store restaurant, The Walnut Room, in 1907 at the State Street store in Chicago. Nordstrom, Bergdorf Goodman and Neiman Marcus all have highly rated restaurants, while Saks Fifth Avenue this fall revealed plans to install a branch of the Paris restaurant L’Avenue at its Fifth Avenue flagship as part of its $250 million renovation. Urban Outfitters even recently acquired a pizza chain — a move that some investors didn’t really understand.
Some retailers believe that by adding technological advances they have created experiential shopping. Clutch, a consumer management platform, said some of its retail customers are trying to tap into mobile apps to enhance the shopping experience. Matthew Segal, vice president of account management, said, “They use it to create a connection with coupons, rewards and the ability to use beacons.”
The increasing use of ad blockers may hurt that strategy. “The middle-tier fashion brands have a much greater challenge in the world of customer experience, as the amount of investment in store experience must be metered,” said Andrew Billings, senior manager at consultants North Highland.
Oliver Chen, retail analyst at Cowen & Co., believes Kate Spade has been successful at creating experiential shopping. “There has to be a really compelling reason for someone to come into the store. Kate Spade is a good example of how this is done,” Chen said. “They do a lot of storytelling that’s Instagrammable. There is differentiation and authenticity.”
Kate Spade, like Ralph Lauren, has a home goods line that melds with the Kate Spade lifestyle.
Polo Ralph Lauren, meanwhile, recently installed an interactive fitting room at its Fifth Avenue flagship that boosts its omnichannel capabilities but also enhances the shopping experience. The fitting room, developed by Oak Labs, enables shoppers to tap on the mirror to request a different size, corresponding items or to seek assistance from an associate.
Companies like The Gap haven’t changed the basic layout or look of the selling floor in years. There’s no brand blog, no clear Gap lifestyle. Abercrombie used to have shirtless models that greeted shoppers and pulled them into the store, but they dropped that effort and haven’t found a replacement.
“What’s happening generally is there’s a higher bar for the consumer,” Chen said. The consumers have spoken and they want apparel retailers to turn the shopping trip into an event. The ones that do that will win the battle for those shrinking clothing budgets.