Department stores have undergone massive changes over the past several decades, and many of those changes are instructive to the retail industry at large. In fact, a pendulum swing is occuring within the world of department stores.
In the past, department stores were known for carrying a diverse range of high quality products, providing excellent customer service, and creating an immersive and luxurious shopping experience. But that changed in the ‘50s and ‘60s when department stores began moving out of urban areas and into the malls and shopping plazas of the suburbs. Convenience, as opposed to experience, became a top priority, and apparel became the primary product category these stores sold.
Today, the pendulum is swinging back. Department stores are undergoing a new evolution thanks to the rise of the internet and e-commerce. In order to thrive, many of the values department stores held in the past must be renewed in the future. Experiential shopping, high quality products, and superior customer service are all qualities that can set department stores apart in an era of one-click shopping and same-day delivery. As director of retail studies at Columbia Business School and former CEO of Sears Canada Mark Cohen explains, convenience is table stakes for retailers while experience and quality can be huge differentiators.
In a conversation with Sidecar, Cohen explains how department stores need to evolve in order to thrive and shares key lessons all retailers can apply in order to remain competitive in a changing industry. In particular, Cohen says that retail executives must be flexible and anticipate that trends today may not exist tomorrow. Executives must constantly assess their markets and use up-to-date and even predictive analytics to stay ahead of the curve.
Despite the tumultuous nature of the retail industry, Cohen maintains that five key pillars of retail have remained constant and should continue to inform retailers strategies. Those are pricing, product, presentation, productivity, and people. If retailers can remain true to these pillars, they will find success, no matter future technological disruptions.
Listen to the full podcast below.
Top Sound Bites
(edited for clarity and brevity)
On anticipating future trends by staying true to your customers:
“Any time you wander away from your customers’ preferences, as a retailer, you’re putting yourself in deep trouble. You can’t presume that today’s business is a harbinger of the future. You have to be constantly vigilant, looking for cues that the future will bring. . .
The customer is not only always right; they’re always omnipotent. . . retailers who align with their core customers, stay connected with them, and move with their behaviors tend to be very successful. But it requires an element of insecurity that suggests that today’s success is not a guarantee for the future by any means at all.”
On the importance of customer service:
I think customer service is the absolute linchpin of successful retailing whether you’re a specialty store, a department store, or an e-commerce platform. Amazon manages to provide extraordinary customer service even as they’ve gotten extraordinarily large. I don’t know that they’re ever going to let go of that underlying tenant. I think that Jeff Bezos had the view that customer service was going to be a pillar of the company when he started the business, and I think he retains that view to this day. The department stores, generally speaking, but not exclusively, have basically walked away from that.
On uniting online and offline shopping experiences in an omnichannel world:
I think a true omnichannel retailer will have a wonderfully architected website which gives you, the customer, a tremendous sense of the physical store. Then the store has to reflect what a customer might have witnessed online. The two have to operate very much hand in glove, which unfortunately is just not evident today. Right now, most brick-and-mortar retailers with a web business, even if it’s a big and growing business, are using it as a platform to show off what’s on sale at any given moment, rather than tell the story of their brand and their brand equity.
On the increasing speed of retail:
The opportunity to dramatically accelerate the process of providing customers with new and engaging products is going to be the line in the sand between success and failure. Customers have always been somewhat volatile, and that’s never more true than today. Today’s trend is tomorrow’s markdown and so this opportunity to use more current, almost real-time data, to guide decision-making is mission-critical in my opinion.