Power had started to shift from department stores to brands. The journey started sometime in the 1990s when brands were fed up with the cost of a department store.
In 1987 I was a buyer at Macy’s. I started buying large size women’s denim. At the time, Macy’s was heavily involved in the private label business. It took away my bucks and it became frustrating and boring. They gave my purchase budget extra swimwear, but it was unchallenged. Not to mention the misogynistic behavior.
By including private labels in all ready-to-wear products in the mix, margins could be increased. The problem is they bought so deep that it looked like a void. The leaders were lost. There was an attempt to buy out and eventually bankruptcy.
Previously, Macy’s had told brands what the range would be like, and if they didn’t achieve the margins they expected, the brand would pay for them too. It costs real money. The brands began to change the way they worked, and the stores took on more ownership and decision-making for their brands.
Retail began to develop as brands could sell directly to consumers. And now the onslaught of Covid has forced this industry to look closely at where to go and what needs to change. Many department stores are just returning to the well, taking on more debt and restructuring without much else. The only interesting thing I’ve read is that Nordstrum added Tonal, a home fitness company, in 40 stores promoting fitness.
Ralph Lauren announced this week that they would start a subscription rental box. Maybe a little late for the game, but now they own their customers in a new way. Not from someone who bought it from a department store or the Ralph Lauren stores that started opening their flagship store in 1986, not on the website, but through a new relationship curated for the consumer.
My eyes are on the brands. Think of the stores as the passageway through which they pull in a percentage of the consumer transaction. You have to change dramatically to own these huge brick and mortar rooms because their business model has dried up. There’s a great opportunity here for bricks and mortar to really get off the drawing board because the brands have taken over.