Fashion has a people problem.
The stores are there. They’re filled with the latest looks, sales signs, cash registers and the rest. There is only one problem: The consumers are missing.
Shoppers just aren’t coming through the doors the way they used to, according to data from a multitude of sources and a survey of the latest round of quarterly updates from major retailers and metrics.
L Brands Inc. said mall traffic was down about 11 percent last month and was even worse at its Victoria’s Secret chain, where footfall declined 16 percent.
Store analytics firm RetailNext, which follows traffic at specialty stores across the country has tracked more than three years of steady declines, with monthly falls ranging from down just 2.1 percent (April 2014) to off 14.6 percent (April 2015).
So where is everybody? Who knows — but they’re not at the malls or department stores and there isn’t one completely satisfying answer as to why.
Some shoppers are ditching full-price stores in favor of off-pricers, which continue to soar with both TJX Cos Inc. and Ross Stores Inc. citing traffic as a key driver of their comparable sales gains. More business is also being done on the web than ever. And people are increasingly opting to spend on experiences that make for flashy Instagram updates instead of buying stuff.
“After the recession, people really started thinking about their life more holistically and where their money should go,” said Kit Yarrow, a consumer psychologist at Golden Gate University. “Millennials in particular are saying, ‘I don’t want to tie it all up in a car, I want to go to Europe and I want to go to Thailand.’
“Now, handbags are in competition with wine and travel,” Yarrow said. “The consumer mind is really sort of broader. Malls seem crass now. Nobody wants to post a picture of themselves at a mall, they want to post a picture of themselves climbing a mountain or at a restaurant with friends. The smart retailers are looking at other ways, in coffee shops or a pop-up next to a cool restaurant,” to attract traffic.
The latest reading of the Labor Department’s American Time Use survey showed that people devoted 22 minutes a day to the purchase of consumer goods in 2015 — time spent doing everything from shopping online to paying in store to waiting in line for movie tickets.
That’s a decline of 12.2 percent, or 3 minutes, from a decade earlier as people devoted more time to leisure and sports (up 4 minutes, to five hours, 12 minutes) and personal care such as sleeping (up 13 minutes to 9 hours, 38 minutes).
Stuck in the midst of a years-long malaise, retailers are pushing more than ever to bring people into their stores.
Just two weeks ago, Brian Cornell, Target Corp.’s chief executive officer, earmarked $7 billion over the next three years to retool the chain and renovate more than 600 stores to drive sales.
“Traffic drivers are fundamentally different, and guests behave differently, too,” Cornell said in his pitch on the initiative to Wall Street. “They’re looking for inspiration, they enjoy discovery, they enjoy shopping.”
The ceo said store remodels in Los Angeles and Texas showed, “as we bring a new experience, that drives traffic towards stores.”
Brands are also part of the plan and Cornell pointed to the Cat & Jack kids line, which grew into a $1 billion business in its first year.
“We think about how the smart network comes together, brands play an important role, that in-store experience is critically important, being in the right neighborhoods, but then we also know from a digital standpoint, more and more our guests are ordering online and immediately they’re coming to our stores to pick up that order,” he said. “That allows us to really make sure that once they are in our store, they continue to shop. So all of these elements are all about driving traffic to our stores and more visits to our site.”
Art Peck, ceo of Gap Inc., is also looking to boost traffic and said the bad trend in the market could be overcome, pointing to the planning, marketing and product at Old Navy, which drove a 12 percent comp sales gain in December and a 5 percent rise for the fourth quarter.
“Apparel is a growing category and the traffic is out there,” Peck maintained. “It is an awful lot of digital traffic at the end of the day. I’ve been saying inside the company that a headwind’s only a headwind if you’re facing in the wrong direction.”
And James Nordstrom, executive vice president and president of stores at Nordstrom Inc., contended the department store is heading in the right direction with a steady flow of new merchandise.
“[The] next step is to get transactions going, transactions is a proxy for traffic, and it’s been declining for the last couple years,” Nordstrom said. “We see opportunities to drive traffic through new experiences…We’ve got a number of initiatives we’ll be rolling out in the next year or two. Store reserve is a good example where we can use our stores to really connect our online experiences and our store businesses in a pretty profound way. So there’s a blending of the digital experience across the customers’ entire shopping journey.”
So the solution to retail’s traffic woes, for now, seems to be a combination of better stores, better brands and better connections with the web.
Not that easy, and Wall Street has expressed its skepticism. So far this year, shares of Target are down 23.4 percent to $55.36 and Nordstrom is off 7.3 percent to $44.45.
Gap managed an 8.2 percent gain since the beginning of the year, to $24.27. That was enough to pushing past the Dow Jones Industrial Average, which rose 5.8 percent to 20,902.98, repeatedly setting new highs. Over the past 12 months, Gap has fallen 19.6 percent while the market’s rallied 21.3 percent.