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 closures of these Macy’s stores are a symptom of a deeper problem in the mall shopping experience, not the cause of the malls’ failure.
Today shopping malls are becoming 21st-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% 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 are finding it on ‘Main Street,’ not in the malls.
Small Is the Next BIG Story in Retail
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 on the other side stronger, smarter and more resilient.
I’ve just written a white paper entitled Small Is the Next BIG Story at Retail which describes this emerging trend that will reshape the retail landscape over the next decade. Specifically, demographic shifts, with both aging Baby Boomers and young Millennials looking for a more personal shopping experience, as well as heightened expectations from affluent consumers, will favor 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 tend to demand to be treated with a high level of personal service, and expect a differentiated, experiential sell.
Over the next 10 years, independents 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 en masse 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.
Find Out How Your Store Measures Up
The power of market research allows us to make informed business and marketing decisions. We have created a survey to assess the state of the specialty retail industry. As a thank you for participating, we will share the results with you so that you can compare your individual store’s performance against the industry sample! Click here to take the survey now.
Unity Marketing – Research Services for Retailers
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.
Unity Marketing offers a range of research services tailored to the specfic needs and budgets of retailers, large and small, as well as to marketers and brands that sell through retailers. We are experts at helping make the research data and findings actionable for your specific business. Please contact me [email protected] or call 717-336-1600 to discuss your needs.