Secrets to Fashion Retail Store Success – Even in This Down Economy
Explore the secrets to achieving success in the fashion retail industry, even in a challenging economy.
Even though many of us love shopping online, the allure of in-person shopping cannot be surpassed. As shoppers, we do not want to wait for online inventory when we can get the latest fashion straight from the runway to our wardrobes by shopping in person.
In 2023, shop additions in the United States and United Kingdom outnumbered closures for the second year in a row, with 5,800 openings and 5,200 closings. This trend is predicted to continue in 2024, with 5,500 new outlets and 4,000 closures. Despite issues in the office real estate market during the pandemic, demand for retail space is increasing. US retail center vacancy rates fell to 5.3%, the lowest level in more than 15 years.
According to industry observers, retail is a successful business due to its fixed costs and limitless growth opportunities. Long-term leases and a steady initial investment can help ensure profitability as sales grow.
Location is the Next Big Thing
The location of a retail store can play a vital role in its growth. Let’s look at a few examples of successful retail stores that have excelled in this industry:
Before committing to a new location, Primark conducts extensive research for years, analyzing everything from foot traffic patterns to nearby merchants. They want to guarantee that the chosen location will support robust sales, whether through mall footfall or an established client base. Gabriella Santaniello, a retail consultant, highlights the necessity of accurate site selection, using the example of a business that suffered in a less populated region of an otherwise famous mall.
Luxury boutique company Elyse Walker takes a careful approach, hosting many pop-up events in potential new locations to assess client demand before obtaining long-term leases. They prioritize client input and sales data to determine market suitability. Surrounding businesses play an important role in location selection, with Elyse Walker favoring proximity to eateries to attract unplanned customers. They avoid extremely congested areas, such as Rodeo Drive, instead focusing on residential closeness to their target clients.
Suitsupply, a men's custom-suiting franchise, selects locations based on intentional client behavior rather than high foot traffic regions. They frequently choose unconventional stores and prioritize customer experience over prominent real estate.
Most retailers choose long-term leases because they provide stability while growing a client base and amortizing development expenditures. Lush Cosmetics, for example, prioritizes neighborhood ties and needs time to recover building costs, thus they choose extended leases. Overall, merchants encourage rigorous research and community involvement in location selection, aiming for sustainable expansion and customer loyalty.
Products Can Save a Store
Some seasoned industry watchers, particularly those focusing on Macy's, Kohl's, and Nordstrom, are concerned about these firms' future prospects. Macy's recent decision to close 150 additional shops by 2026, nearly halving its footprint since 2018, has fueled these fears. Activist investors have put pressure on both Macy's and Kohl's, with some preferring to sell their real estate holdings rather than reinvest in their retail businesses.
According to Andrea Wasserman, a retail industry veteran and former Nordstrom executive, department stores are now struggling to compete with Instagram and TikTok as key product discovery platforms. However, they have a distinct advantage: physical locations. Wasserman highlights that, despite the attractiveness of online platforms, people still turn to physical stores for inspiration and convenience. "You can follow any influencer on TikTok, but you still need a place to go to see a new style or brand," Wasserman explains. In essence, while digital platforms offer exposure to trends and products, the tangible experience of browsing through physical stores remains essential for many consumers.
Brands Falling Prey to Competitors
Both H&M and Nike have faced challenges from their competitors, albeit in different situations. H&M, led by Daniel Ervér, faces a changing landscape in the fast fashion business, where competitors such as Shein have quickly gained traction. H&M has struggled to establish its foothold in a market dominated by low-cost online rivals and Zara's "upscale" fast fashion. Ervér intends to address this by adapting to trends more rapidly, like Shein, while also expanding into higher-priced products, like Zara. However, the company's commitment to sustainability, championed by former CEO Helena Helmersson, remains dubious under Ervér's leadership.
Meanwhile, Nike has its own set of issues, including stagnating sales and an identity crisis under CEO John Donahoe. Despite recording flat growth in a recent quarter, Nike faces stiffer competition in the sportswear business. Adidas, in particular, has experienced a resurgence, with its stock up 40% in the last year. Adidas' vintage shoe brands, such as the Gazelle, Samba, and Campus, have become more popular than Nike's famous basketball sneakers, such as Jordans and Air Forces.
Are Employers Playing an Important Role in Retail Success?
Retailers like Suitsupply and Elyse Walker encourage employee retention by providing competitive salaries, benefits, and opportunities for promotion. By keeping turnover low, they can maintain consistent client service even during economic downturns.
Furthermore, providing clear professional progression routes increases employee loyalty. Suitsupply offers structured professional development initiatives such as the Sun Path and Moon Path, which offer prospects for advancement within the organization. Similarly, Aritzia nurtures internal talent through its Aritzia University program, which develops employees from entry-level to management positions.
Suitsupply and Aritzia invest in employee retention and development to improve client experiences and generate long-term profitability. They understand that contented and engaged staff contribute significantly to overall service quality, which in turn influences critical indicators such as sales and customer satisfaction.
So, Is the Retail Store Staying?
This is the question that we all have, right? Is it staying? I really believe it is! The appeal of shopping in person rather than online shopping is here to stay!
People and fashionistas want to try their outfits, see how they look on them, bargain even, and get the satisfaction of carrying all those bags!
About the Author
Meet Anna Livermore, the CEO of V.Mora. With a focus on scaling businesses and optimizing supply chains, Anna is a seasoned expert in the fashion industry. Her strategic prowess and hands-on approach have propelled numerous clients to success. Join us as we delve into Anna's insights, uncovering the keys to thriving in fashion. Get ready to elevate your brand with Anna's guidance and expertise. Welcome to the world of fashion innovation with Anna Livermore at the helm.