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Posted by on Feb 26, 2018 in Economy, Society | 0 comments

The Future: Fashion Retail

Big malls are struggling, but brick and mortar clothing stores may not be completely obsolete

Garment retail is already changing dramatically. Big malls are struggling, but brick and mortar clothing stores may not be completely obsolete. Some pain points have arisen in the new delivery model, that could, and seems to be, driving the establishment of a new type of store.

Smaller, efficient, convenient, AND without any stock to buy. Nordstrom’s has just opened its first store with this concept.

Distribution Pain Points: Amazon, and especially smaller distributors or delivery-oriented on-line retailers, are suffering from several points of pain

No Relationship: People like to deal with people. They often return to the same bar or restaurant, because they like the people who work there. The fare is comparable. Customer acquisition costs are often extremely high. Maintaining a customer once you have them, is every bit as important. On-line stores struggle to build loyal personal relationships with their customers. One false move and they’re lost.

Restocking: The garment, once delivered, simply does not look the same as it does on one’s computer screen. The buyer is generally not sure of her size in a designer’s fashions. So, she orders multiple versions of the blouse, and returns the rest, causing lost perceived sales, restocking costs, and extra shipping fees, often borne by the on-line retailer.

Lost Packages: Packages, often enough, never reach their buyer intact. They may be stolen, rained on, kicked into the bushes, etc. These have to replaced, often at the retailers cost, or, at a minimum, significant loss of good-will. Remember, there is no human interaction. The issue has become big enough that Amazon is taking pictures of your front porch.

Current Store’s Pain Points: Existing brick & mortar stores deal with:

High occupancy costs – to hold all of what the store has traditionally carried, it must rent a great deal of space at a rather high cost.

High inventory costs – to provide all of its shoppers what they need, when they are at the store, they have to carry large inventories.

Slower inventory turns – As more and more people shop on-line, often after trying on a few items at the store, the inventory in the store turns slowly and has to be sold at dramatic sale prices to be moved.

Taxing Authorities: States, Counties and Cities want their sales taxes.

Taxing On-line Sales: They are working diligently to figure out how to get their money from companies that deliver into their areas.

Paying Taxes on On-line Sales: This is a major pain point for distributors as they try to keep track of the myriad entities trying to tax their sales, which may amount to only a few garments in any one city.

The Solution: Smaller brick & mortar retail stores, located in targeted neighborhoods, that carry only one of everything that would normally be in the store. Nothing can be purchased and taken from inventory. It is all there for show, fit and feel. One blouse in each size, each size representing a different color. A shopper can determine whether she is a 6 or and 8 in this garment, and whether the blue or green looks best.

She then purchases the chosen item through an app on her phone or at a kiosk at the store. The app identifies what store she is in or was last in, and credits that store with the sale.

Advantages: With distribution centers located in low cost areas, near several metro areas, garments can be delivered quickly. Same day, next morning, etc., could all be options, at an appropriate cost. Delivery would be to the store to be either picked up, or delivered directly to the buyer when and to where the local store can verify she will be available to receive it.

Dramatically reduced costs associated with returns, restocking and the like. Guaranteed receipt by the buyer of the product, in good condition, when she needs it. Much lower occupancy and inventory costs. And, taxing authorities get their money, because the stores are easily identifiable, reducing the need for layers of complex taxes that are difficult to collect, track or pay.

Taxes are paid at the store level. Everybody’s happy.

This has already begun. In addition to Nordstrom’s, Bonobos, an on-line men’s clothier, has begun opening its brick & mortar stores. Men have long purchased their higher-end fashions from vendors who take their measurements, show them options and then deliver the clothing later, like Tom James, which existed well before the retail internet.

It may take several years, but retail is changing. Plan for it.

photo credit: Phillip Pessar Aventura Mall via photopin (license)