Is Retail Still Stuck in 1976?

A few weeks ago, I read an article in Fox Business titled, Why Is Retail Still Stuck in 1976. It piqued my interest. I felt compelled to provide my perspective on retail today. I don’t disagree with all points made in the article, however, being of an age where I’ve seen retail involve over the years, wanted to add my perspective.

Why Is Retail Still Stuck in 1976?

By Gene Marks Published May 10, 2016 Small Business FOXBusiness

When I was about ten years old my mom used to take me to a Macy’s department store on Saturday mornings. We would walk around and around. She would try stuff on or make me try stuff on. There were always counters where special items were on sale. She would always buy something. And when she did we would go to the counter and she would pay with her credit card. The store assistant would wrap things up in a Macy’s bag. Sounds excruciating, doesn’t it?  Oh, it was.  But at least I would get ice cream on the way home.

One of the reasons shoppers go to Macy’s is extra personal touch they may provide so wrapping up gifts or purchased items takes some time. defines excruciating as extremely painful, causing intense suffering, unbearably distressing, torturing. Is there some hyperbole used here how excruciating shopping was 40 years ago? Would annoying or irritating or bothersome been more appropriate?

I’m now 51 years old. Last Saturday I went to a Macy’s department store with my wife. We walked around and around. She tried stuff on and made me do the same. There were counters with sales items. She bought a few things. She used her credit card. Everything was put in a Macy’s bag. Still excruciating?  God, yes. But I made sure to get some ice cream so the afternoon wasn’t a total loss.

No, this is not about ice cream.  It’s about something else.

Macy’s (M) releases its earnings this week. As does Nordstrom (JWN), Kohl’s (KSS), J.C. Penney NYSE:JCP and its other department store competitors. These are all old-school, well-known names in the retail industry. And they’re all struggling because they’re facing online merchants that are eating their lunch and a new generation of Millennials that are (justifiably) demanding a different kind of buying experience in 2016 than the one I suffered through in 1976. But they’re not getting that. Walk into any department store today, then jump into the “Hot Tub Machine” and go back 40 years and you’ll be unnerved by the similarities. Nothing’s really changed.

What happened to the promise of retail tech? Why is retail still stuck in 1976?

Millenials of course don’t take the same approach toward shopping as baby boomers for sure. Of course, millenials are more likely to order things online and don’t buy as many items from the brick and mortar store. However, empirical observations may show they have not completely given up on the mall scene. Visiting several Chicago area malls over the last few years, it’s amazing how many 20-35 year olds are shopping, socializing or just hanging out at the mall. They’ve not necessarily given up on malls, but rather realize mall shopping is one of several options they may choose when shopping in 2016. Most of them realize there is the social aspect that can’t currently be replaced by doing all shopping online.

Where are the promised “beacons” that will notice me as soon as I walk into the store and alert my mobile device with bargains and offers based on my preferences and prior purchases? Why are the shop assistants still standing behind counters and cash registers instead of roaming the floors with tablets that are not only ringing up sales but recommending accessories and other items based on my preferences? How come, with all the talk of Apple Pay, Android Pay, PayPal, Square and Samsung Pay I’m still whipping out my old-school credit card every time I want to make a purchase? And why is it that, even with all the new chip cards and warnings from the credit card industry, I’m still swiping like my mom did decades ago? Wait – what happened to the promise of those RFID (Radio Frequency ID) tags that would be attached to every item for instant inventorying and checkout through a scanner?

I know from Macy’s and Kohl’s there are some shop assistants wondering about the store or welcoming people in the store by the cosmetic area.

As of May 2016, there are 60-70% of all stores I’ve experienced over the last 6 months that are utilizing the new chip cards. It’s taken up to a year to switch over but most well know retailers have done so.

And that’s not all. Why are there still advertisements in the newspapers (newspapers?) like there were in 1976 but no coupons or special offers sent to my mobile device automatically? Or QR codes with video explanations in every department? How come I can’t buy an item on the store floor from a kiosk and have it delivered to my home that day instead of trudging around the mall with it? What about the promised in-store mapping where impatient men like myself can get directions to the items I want immediately so we can get back home to Sports Center?

Wait, so you don’t want the challenge of figuring out the layout of a store or reading a map and would rather spend a minimal amount of time to get back to Sports Center? If you’re so in to technology, why not watch SC on your phone while you’re waiting in line or waiting at the dressing area while your wife is trying on clothes? That may be a win-win.

One more thing, some say that Sports Center is so 20th century. You rail against retailers not incorporating some of the latest technology although ESPN to a great extent is doing the same thing. With so many mobile devices today, many viewers are not going to watch the highlights on SC as they may want them instantaneously, especially the millennials, and will choose several providers to satisfy their highlight fix. I think ESPN is going to have to do much more innovating in the near future if they want to stay relevant.

None of this is happening yet. Wasn’t this supposed to be the promise of retail tech? I know all of this technology exists. And there have been many news reports over the past few years that retailers like Macy’s and Target were putting these things into place. And maybe all this location-based technology is secretly happening behind the scenes and the data geniuses at these stores are analyzing great quantities of information about shopping behavior with it. Maybe. But as a consumer I’m not seeing it or benefitting from it and, given the industry’s financial struggles of late I’m pretty sure their investors aren’t either. Maybe the technology is over-hyped. Or maybe it just costs way more to implement than expected. Maybe retailers are scaling back on their technology plans in this era of decreasing profits and tighter margins. Or perhaps the return on investment has been too optimistic.  Maybe it’s all of the above.

Whatever the reason may be, it’s killing the industry. I don’t see any merchant doing this – big or small. Instead I just see more and more customers buying their products online because it’s faster and easier and the competent online merchants (yes, you know who they are) are doing a better job at targeting their best customers, recognizing them when they’re shopping and rewarding them for their loyalty. Some may see this as a brick-and-mortar disappointment. But others, particularly smaller merchants, may see this technology gap as a potential opportunity to stand apart from their old-school big-box bigger competitors and offer a better experience that the big guys are not able to deliver right now. Maybe.

Online is here to stay. And it’s a larger chunk of retail’s business. However, many of the brick and mortar stores are not going away. Shopping can be a social event, yes, it can be inconvenient but it may give you something to do. At the Hawthorn Mall in Vernon Hills, you can dine, watch a movie in the comfortable AMC theatres, shop, browse, or walk. It’s social and gets you out of the house. One must realize shopping at a mall gets people out of their home during crummy weather for 6 months and provides a diversion. Things are changing at malls, perhaps not always so quickly with the big retailers, but change is occurring.

Or maybe all of these merchants will just keep delivering the same shopping experience that I had back in 1976. If that’s your strategy then I strongly recommend offering some ice cream too.

Comments by Kevin Schwarm


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