Byline: Dick Silverman

NEW YORK — Mom-and-pop stores may be heading for retirement.
While they ruled the retail landscape in the days of bustling downtown shopping districts, Fairchild Publication’s Strategic Information Services’ special report on the women’s specialty store apparel market revealed independents today have a total market share of just 7 percent, having been battered by consolidation, stagnant store sales, rising costs of operations and intense competition with department stores and mass merchants.
According to the SIS analysis, independents face an uncertain future, but may still prosper and maintain healthy margins if they target changing consumer demographics and specialize in outstanding customer service, ambience and niche products.
The outlook for independent stores is hazy, said Susan Silverstein, managing director, Banc of America Securities.
“It’s a difficult circumstance for mom-and-pop shops,” Silverstein said. “They lose on buying power, leverage, cost — the areas that are becoming ever more important in this business.”
To survive, independents must “live by their wits and reinvent themselves every season,” said Emanuel Weintraub, president of Emanuel Weintraub Associates Inc.
“How are they going to differentiate themselves from the mega-retailers? Even if they get the megabrands, they have to offer something the large retailer can’t offer, like the extra level of service,” Weintraub said. “But barring that, they face a difficult future.”
Independents do not have the size or scale of major stores so are not targeted by most top brands.
“They’re at the bottom of the chain,” Weintraub said. “The independent will thrive only to the extent emerging independent producers survive, because the hot styles will be shipped to important customers before they are shipped to the small customer. They can thrive only by being extraordinarily innovative and offering a level of service and customer chemistry consumers can’t get elsewhere.”
But SIS research reveals several areas in which independents still can aim for increases.
First, stores should stress unique product that grabs consumer attention and focus on fashion merchandise not available in other channels. They should offer niche products and give more floor space to special categories with potential for sales growth.
Secondly, independents should reorganize floor layouts, subdividing broad collections in ways exciting to shoppers. In-store shops will help consumers see the store as an exciting destination, and product should be updated frequently with visual merchandising that keeps customers coming back.
In addition, customer service should be upgraded with features unavailable in department stores or chain shops, like hard-to-find sizes, free alterations, home delivery, fashion shows, seminars, gift-with-purchase promotions and personal shopping services.
Retailers should also use market research like focus groups, surveys and test marketing programs to target new customer bases and fill their specific needs.
Stores must upgrade customer communications to increase traffic, as well. They may assume shoppers find them by location and signage, but unless they are in high-traffic areas, that may not be the case, SIS observed.
Since daily newspaper readership has declined in some cities, stores should attract customers with ads in radio, direct mail and Sunday newspaper inserts.
Demographic changes will bring growth in certain age groups that could benefit independent retailers.
“Young Elderly” customers, aged 55 to 64, are one of the fastest-growing segments, totaling 50 million consumers, and will rise by 3.5 million in the next several years, according to research. The 28 million teen population will rise by another 2.5 million in coming years and has strong interest in fashion apparel.
“Teens today have money and are very interested in dressing well and looking good,” the SIS study reported. “Teens today are sophisticated shoppers and the first generation comfortable with technology. They will have a profound impact on the future of retailing.”
America is also breaking into smaller groups diversified by ethnicity, lifestyle and shopping habits, offering potential to independents. African-American, Hispanic and Asian consumer groups will grow more rapidly than Caucasians, and independents can succeed by appealing to these groups and offering fashion they seek, the SIS study contended.
To many consumers today, service is everything.
“New-fangled” independents have emerged, offering new, hip fashions but old-fashion service, said Faye Landes, analyst at Thomas Weisel Partners. “They have to provide something special, like service, special sizes, customer relationships.”
Landes noted independents may be under fire, but can prosper emphasizing special services.
“There’s always going to be a need for them,” Landes said. “I wouldn’t rule them out. If they provide something consumers can’t get elsewhere, they will always have a market.”
Specialty stores offering personalized service are returning because “retro is back in everything, and people are going back to what they know,” said Dana Telsey, senior managing director at Bear Stearns.
Technology advances also have been a ray of hope for independents, Silverstein noted.
“They will open new channels for small players savvy enough to take advantage,” she said. “From inventory auctions to accessing sourcing and private label opportunities through public access exchanges on the Internet.”
Weintraub added it is often the little extras that count most.
“People don’t always go in for price,” he added.
“They go in for service and merchandise. If they’re going in for that perfect little dress for their granddaughter, they don’t care what the price is. There will always be a small retailer that caters to that market.”

SIS Tracs is part of Fairchild Publications’ continuing series addressing strategic issues significant to the global apparel industry. The articles in WWD will examine SIS proprietary research and analysis of the major trends and developments having an impact on the industry.