Management Sponsored by
Future of Retail: Yumiko Nishikawa (Shiseido Cosmetics America), Maura Cannon (Clinique/Estée Lauder Companies), Denee Pearson (Lancome/L’Oréal USA), Jennifer Marino (MediaCom).
Group Mentor: Michele Serro, IDEO New York
“Retail as we know it has failed.” This critical quote from Marshall Cohen of NPD serves as a wake-up call to us all. For the first time in more than 20 years, we watched U.S. retail take its largest decline in 2009, decreasing by 7%. Last year alone, a staggering 10,000 retailers closed their doors while unemployment soared to 10%. As best said by Wendy Liebmann of WSL Strategic Retail, “Prices on everything were going up. Savings were non-existent. Credit was maxed out. American shoppers were stretched too thin.” As a result, the shopping dynamic shifted. “Consumers were no longer living to shop but shopping to live.”
It started with an artificial inflation of retail growth that was fueled by the opening of more and more stores. This behavior was further encouraged by the “age of excessive credit-based consumer spending” along with the immense affluence and grand scale of the U.S. market. Stores were over-sized, overstocked and everything was on sale. When the economy spiraled, consumers were forced to reduce spending and retail struggled to remain profitable. Retailers sought to reduce their inventories in any way possible—resorting to heavy discounts, coupons, doorbuster sales and gifts-with-purchase incentives. In the fight for survival, many retailers lost sight of their main purpose—to entice, engage and entertain their customers.
During this vulnerable period, many retailers chose to play it safe and not make any major shifts in their strategies. Interestingly, many of the winners were the ones that took a risk and broke down the barriers. This was best communicated at the recent WWD CEO summit by Glen Senk from Urban Outfitters. “We didn’t have a choice about taking risks. If we had offered the things that we had offered previously, the customer wasn’t going to buy it. If it was in her closet, she was shopping her closet. So the only way to capture the customer was by giving her true innovation. For this retailer, the quest to provide innovation at retail showed real results in a tough economy.
Other retailers that have successfully taken a risk and been successful during these difficult times include: