Issue No. 223: Content / Commerce 2.0

American Retail Failure

By: Hendrik Laubscher on Issue No. 212

The retail job losses have not become a political hot potato due to the lack of a retail version of UAW (United Auto Workers).  The large labour unions have ensured that mining and other manufacturing jobs have been getting more political attention.

In saying that – in all honesty there a few things at play with this situation:

  • There are way too many retail locations in the US – locations were seen as capital generation instead of capital expenditures. Best example of this for me is when¬†Howard Schultz came back to lead Starbucks they closed under performing locations – I don’t know of any retailers who have done that.
  • Retailers have signed leases that were not properly forecasted. A 20 year lease is a significant investment that has little validation from sales etc.
  • As ecommerce has grown retailers have not invested properly. Target, Nordstrom are but a few that have been future proofing their businesses. I believe their headquarters being in less populated areas Seattle and Minneapolis has lead to them being more nimble than normal retailers.
  • Retailers have forgotten that they are a community asset and employ local breadwinners – they have not evolved with the de-urbanization of retail.
  • Your point on logistics staff being the new low income job champion is spot on and is driven by the location of warehouses of online retailers.
  • Retailers have also lost focus – an experience for customers does not mean having a branded coffee shop or pizza shop inside your location. This hit me while I traveled in the US in October 2016.
  • On demand services have added value that should have been driven by retailers. Instacart, Curbside, etc. are retail functions that were neglected.
  • The retail board of all major retailers have struggled to attract younger members. I hate playing the age card but the progressive retailers (Target, Nordstrom and lately Walmart) they have young blood.
  • Retailers have not adapted the roles that their staff plays. Nike and others have made sure that their staff are helpful, knowledgeable and approachable. This for me boils down to founder DNA and some retailers have struggled with stock price declines and thus have been forced via financial performance to make changes.
  • Off-price retailers are not online but provide customers with pricing that makes purchases and repeat purchases a possibility. Why are TJMaxx able to show good yearly performance? A smaller footprint, I believe.
It is a complicated story that needs data and graphs to communicate this sad tale. Amazon is not the only factor.

See more of the issue here.

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