The cull of retail businesses spells the end for mediocre malls
We’ll send you a myFT Daily Digest email rounding up the latest Retail & Consumer industry news every morning.
This article is a part of a series in which the Financial Times asks leading commentators and policymakers what to expect from a post-Covid-19 future
The writer is the founder of PortasAgency.com
The cracks in the retail industry have been visible for a very long time. Disharmony around business rates, mall closures in the US, job cuts, decreasing footfall, empty units and ghost-town shopping centres. Pretty gloomy stuff — and that was before coronavirus struck a devastating blow to both supply and demand.
But most developed nations are still way overprovided with stores, even after the closures of recent years. In the brave new world that we are reaching for now, the quantity of stores will go down but quality is more likely to go up.
And here’s the good bit for the shopper. Average is over. Mediocrity is out the window, along with our summer travel plans. The bland, the dull, the middle-of-the-road merchandise — forget it. The retail businesses that will survive, the ones who will come out with a deeper connection to their followers (note I don’t say consumers: the days of rabid consumerism are over), are those with hard-earned brand equity. They knew being good enough was never good enough.
Look at the brilliant Liberian-American fashion designer Telfar Clemens, whose slogan is “Not for you, For Everyone”. The brand releases new products on the first Friday of the month, when “people don’t have to worry about the rent again for 25 days”. Sales in the first quarter of 2020 were more than 10 times greater than the year before.
The heritage fashion houses, on the other hand, still working to an archaic seasonal schedule, will struggle to stay relevant. It’s the cult streetwear labels that understand hype; they have created a cultural relevance that moves with the moment, not the “season”. This should be the inspiration. They don’t attract shoppers, but fans, who buy into a shared value system rather than buy from a brand.
Meanwhile the likes of Glossier, the disruptive billion-dollar beauty brand, have effortlessly and instinctively built devoted followings online, then created physical spaces as extensions of their virtual worlds. They know how to give a product a covetable feeling.
This is the future. When pundits lament the fall of Debenhams, House of Fraser, Macy’s, or the other high street stalwarts collapsing under the weight of the crisis, I wonder — when was the last time they went to one of those stores? These spaces offered very little beyond floors of stuff.
The retail behemoths had come to rely on the physics (how fast, how big and often how cheap) of their business, but underestimated the chemistry. They were out of touch. It’s taken a global pandemic to reach the nadir, but they were already over halfway there.
With all non-essential shops shuttered in the short-term, and McKinsey predicting that 80 per cent of publicly listed fashion companies will be in financial distress if they are closed for two months, we need to ask ourselves now more than ever: “What is the point of a bricks-and-mortar store?”
For far too many brands, from supermarkets to high-end fashion, digital presence was an afterthought. A knee-jerk reaction to this crisis would be to move entirely online. But the great brands will always want to express their power in three dimensions. There will always be a place for physical shops, but they will have to be exceptional. This doesn’t mean expensive; it means brilliant and ingenious.
Our future shopping centres and malls (even those words seem set for extinction) will be curated. They will serve the community better. Landlords need to understand what people want and how they live. The spaces have to become social, connecting us as well as delivering surprising, innovative retail and leisure.
Right now, the only shopping we can do “IRL” involves standing 2m apart in a car park, waiting to snaffle whatever is left on the supermarket shelves. Coronavirus will leave its imprint on us as consumers and as an experience of loss, fear and an atavistic fight for survival.
It remains to be seen if the trajectory we were already on before this crisis, with the rise of conscious consumerism and sustainability, will continue. Will we double down on redemption by restraint, consuming less? Maybe we will rebel against enforced cultural and consumer quarantine to go everywhere, do everything, buy now.
But the future of modern aspiration has very little to do with more, more, more. It will revolve around better. Warren Buffett says, “when the tide goes out you can see who has been swimming naked”. We will lose many excellent small businesses and start-ups and that is a tragedy. But the tide is now well and truly out and we can see the ugly truth. Too many big retail brands have been coasting in a sea of mediocrity for too long.
Get alerts on Retail & Consumer industry when a new story is published
As society begins to look beyond the crisis, the FT asks leading commentators and policymakers what to expect from a post-Covid-19 future