I have in front of me the pleasant task of reviewing the quarterly fillings of a bunch of our favorite retailers. But before I get to that, I thought I might point you at this article that talks about the future of malls in the U.S. It may have something to do with the evolution of retail.
Like me, you know that we’ve got way too much retail space in this country across all industries. But when the article tells us we’ve got 50 square feet for every man, woman, and child and Great Britain (which may be less great by the time you see this depending on the Scot’s independence vote) comes in second with 10 square feet, you began to get a sense of just how big the problem is.
The article (go read it) talks about anticipated mall closings, how no new malls have been opened since 2006, and that’s it’s only the high end malls that can expect to prosper. He also makes the rather obvious point that online is cannibalizing, brick and mortar sales.
Most of the retailers I follow, of course, are opening new stores. Those new stores are a critical part of their long term growth strategy. As they open these stores, they chant, “Omnichannel! Omnichannel!” like it’s a protective talisman with mystical powers.
For some I guess it will be. They will the ones who figure out how to integrate brick and mortar with mobile and online to generate enough incremental operating income to pay for all the costs they incur in the process. I’ve pointed that out before.
But that additional operating income won’t all come from more revenues. It will come from smaller stores, configured and merchandised differently. It will come from lower inventory levels as more sophisticated systems and increasing comfort with getting it next day or the day after means customers can be satisfied without having every piece in all sizes and colors in each store. I also think it’s going to come from increased U.S. manufacturing, resulting in shorter lead times.
Finally, and most importantly, it’s going to come from an increasing understanding of how mobile and online relates to brick and mortar. That is, the decision as to where and what kind of store to open will be influenced by the online/mobile activities and demands of customers in the area, or potential area, of the store.
And, by the way, I’m not quite sure I know what “store” is going to mean in the future. Larger or smaller? Permanent or temporary? What will location criteria be? How will they be fixture and inventoried? Will they sell the actual product or maybe just let the customer see the product then download the specs to be used at home on their 3D printer? You might want to listen to this Ted Talk on the subject. Consider the implications for manufacturing and supply channels.
Remember this is all going to be happening while brands stop telling customers what they should buy and have to ask customers what they want to buy and give it to them- quickly. I don’t know how this is all going to work out, but it should be fascinating. And it’s not all going to happen in malls.