Macy's just announced it will be closing 35-40 stores in 2016. This will likely mark the slow, steady progression toward death for the malls to which those stores are attached. But maybe the closure of these Macy's stores is a symptom of a deeper problem in the mall shopping experience, not the cause of the malls' failure.
Today, shopping malls are becoming twenty-first century ghost towns. Since 2010, more than two dozen enclosed shopping malls have closed, and an additional 60 are on the brink. By 2025, an estimated 15 percent or more malls will be closed or repurposed, according to projections by Green Street Advisors.While mall owners blame the trend on the closing of anchor stores, like Macy's, the real reason behind the demise of malls is that shoppers, especially the high-potential affluent customers, have lost interest.
Today, the sameness and ubiquity of the big-box store experience is beginning to show fatigue. Walk through any of the nation's 1,000 or so enclosed malls and you might notice they all look much the same.
Filled with the same stores offering the same merchandise at the same “sale” price, it's too much of the same thing. Consumers are beginning to look for something new and different, and they’re finding it on “Main Street,” not in the malls.
Shoppers are abandoning malls and coming back to Main Street.
Main Streets and the independent retailers that thrive there are on the cutting edge of a new shift in retailing. While the Great Recession took out a wide swath of retailers — economic natural selection at work — the successful retailers that remain represent, by and large, the best and brightest. They have come through the worst and emerged onto the other side stronger, smarter, and more resilient.
In the future, the consumer preferences of baby boomers, millennials, and affluent consumers will favor a more personal shopping experience and the special services and products that only local small businesses can provide.
Specialty retailers need to target the affluent customers in their communities. While the middle class lost its spending power in the recession and has yet to recover, the affluent, especially the HENRY (high-earners-not-rich-yet) mass-affluent who are the new mass-market customers with discretion, have the incomes on which specialty independent retailers rely.
The HENRYs are passionate about fulfilling their desires in smaller shops where they know store owners and staff. They prefer to be treated with a high level of personal service, and they expect a differentiated, experiential sell.
Over the next 10 years, independent retailers will thrive as multi-generational customers cut back on the one-size-fits-all approach of mass retail and the sameness that it engenders. Customers will seek these smaller stores for a variety of reasons, based on their socio-economic, psychographic, and demographic outlooks. As a result, growth at mass retail will slow down and profits will shrink.
The next decade will see a great winnowing down, restructuring, and right sizing of mass-market retail, which will give a new opportunity to independent specialty retailers — as long as they understand the best potential customers, the affluent HENRYs.
Success at retail has less to do with what you sell and more to do with how you sell it.
In today’s world, retail is no longer a product business, but a people business. The fact that retailers spend so much time thinking about products — what products to sell, how many to buy, how to display them, how to price them, and on and on — it is no wonder that those retailers think that their primary business is Product, with a capital “P.” But it isn’t anymore.
Yes, shoppers may have some specific product need, but they are also looking for something else, something far more elusive, and far more important. They want to engage, interact, get involved, satisfy curiosity, learn something, explore new places, and do new things. In a word, they want an experience. The more retailers satisfy those desires for a shopping experience, the more they will sell, the more money they will make, and the more successful they will be.
Fortunately for the small independent retailers on Main Street, as compared with those in the malls or in the big-boxes, they are far better positioned to provide those unique and special shopper experiences.
In the future, success at retail is going to be far more about how you sell, and a lot less about what you sell. That calls for really, truly, deeply understanding the customer and their shopping, as compared to their product, needs
Understanding the affluent shopper is the secret weapon to retail sucess.
Peter Drucker says, “The aim of marketing is to know and understand the customer so well the product or service fits him and sells itself.”
Unity Marketing’s new study devoted to the shopping habits of the affluent consumer reveals the keys to attracting more affluent shoppers to your special shopping experience. Entitled Affluent Shopper Report: The Who, What, Where & Why of Affluent Shoppers, it examines two years of trends in affluent shopping behavior, showing how they are shopping today and where they will be shopping tomorrow.
The new report provides in-depth statistics about the shopping behavior of both the mass-affluent HENRYs and the Ultra-affluent shoppers at the top.
But more than just data, this report includes analysis about what the key findings mean and how retailers can put these insights into action to more successfully market their stores and reach affluent shoppers effectively.
The Affluent Shopping Report is a comprehensive omni-channel, cross-channel view of the affluent shoppers and is right for marketers who need a wide, horizontal view of the affluent shopper landscape. After all, this is how today’s omni-channel affluents shop, across channels, looking for the right combination of product selection, quality, and price/value.
Today's retail environment is ripe for inspired, creative independent specialty retailers to prosper. The secret of success is the ability for them to know — really know — their customers and deliver the valuable, unique shopping experiences these demanding, savvy, eager-to-be-pleased consumers crave.
To learn more about luxury consumer trends, download Pam Danziger's free white paper, Five Luxe Trends for 2015.
This post was written by Pam Danziger, President of Unity Marketing.
About Unity Marketing
Pamela N. Danziger is an internationally recognized expert specializing in consumer insights for marketers targeting the affluent consumer. She is president of Unity Marketing, a marketing consulting firm she founded in 1992. Pam received the Global Luxury Award for top luxury industry achievers presented at the Global Luxury Forum in 2007 by Harper's Bazaar. Luxury Daily named Pam to its list of "Women to Watch in 2013." She is a member of Jim Blasingame: The Small Business Advocate’s Brain Trust and a contributing columnist to The Robin Report.
Drawing upon their extensive industry experience, as well as professional expertise in marketing research and analysis, product and concept development, strategic planning and licensing, Unity Marketing offers marketing research that helps clients identify and maximize their potential success in the collectibles and giftware markets. Unity Marketing utilizes a full range of quantitative and qualitative research to address its clients' marketing challenges.