Retail Is Dead, Long Live Retail! A First-Person Walk Through The Retail Lab Of New York City
When Lord & Taylor closed its flagship store at the beginning of the year, many people saw it as another blow to brick and mortar retail and a poignant one at that. Hudson Bay, the parent company, sold the landmark Fifth Avenue building to WeWork to be used as their headquarters. Would this be one of the final blows that killed off retail as we knew it? The answer is no, brick and mortar retail is alive and well. In fact, New York City, with its vibrant retailing landscape, is a perfect place to experience the evolution of retailing. When viewed as a whole, New York is really a laboratory for retail.
New York has many success stories. Nordstrom Rack is regularly packed with customers. The brand flagships of Nike and Adidas delight tourists every day. Big box retailers like Bed, Bath and Beyond and Lowe's have been operating successfully for years. A comprehensive survey of even just Manhattan retail would be exhausting and a book-length effort. So instead, I selected several stores covering a range of retailing types, from high to low, to see what was new.
My first stop was a brand new mall in the west side mega project being built over rail yards at the edge of Manhattan. The mall is appropriately named The Shops at Hudson Yards. You enter it from the inside of Hudson Yards across from The Vessel, a climbable sculpture adjacent to the new #7 train subway stop. With subway access, tourist traffic from the High Line park and plenty of moneyed residents and office workers, this mall has built-in viability. Immediately upon entering is an array of luxury retail brands, their presence designed to impress. Beyond that I was struck with just how boring it is. Wandering around each of five floors, I marveled at the complete lack of context. Where was I? Tasteful, yet bland, with a standard mix of retailers, this mall could be anywhere. The entrance to the new Neiman Marcus faces windows overlooking The Vessel. This should have made me feel that I was in the heart of a vibrant new Manhattan neighborhood, but only made me consider that possibility that the windows were actually a digital display and I was really in Dallas. The only memorable experience was the frisson that came with trying on a $5,000 cashmere, linen and silk blend blazer in Neiman Marcus. I can’t see this as “destination retail,” but maybe the built-in foot traffic will keep it afloat.
In search of a better experience, I headed off to the nearest Target. Target, America’s much-loved big box retailer, has taken a different approach in Manhattan. It is opening a number of “small-format” stores. So far, I’ve found one near the World Trade Center, one in the East Village and the latest in Murray Hill. More are coming. The branding was prevalent and the feel as you enter, familiar. Groceries are on the first floor along with women’s clothing. The basement level contains household wares and some men’s clothing. The stores offer delivery for in-store purchases, which delights New Yorkers who have to carry purchases home. The grocery was weighted to in-fill shopping trips and the home supplies were perfect for setting up an apartment, both constant activities in the city. This looks like a winner, convenient neighborhood locations of a trusted national brand carrying the appropriate mix of products for its customers.
I had read about Saks Fifth Avenue’s first and second floor makeover and put that next on my itinerary. This flagship across from Rockefeller Center is literally a New York institution. Even that distinction isn’t enough in today’s disruptive market as the demise of Lord & Taylor and Henri Bendel demonstrated. One must innovate to survive. Saks has already experimented with a new concept, The Wellery, as the second floor was emptied prior to beginning the renovations. The Wellery was an entire floor of boutiques focused on health and well being, including “Con Body” exercise classes run by ex-convicts. Despite America’s continued obsession with all things healthy and the allure of sweating with bad boys, it bombed. But - they did experiment. Plus, Saks got some great press coverage, which is often all that matters.
The new first and second floors are not a transitory experiment, however. This is a major bet on Sak’s future. When I walked through the door I said, “WOW!” The standard first floor of make-up and fragrance has been replaced by handbags and leather goods. Not just any handbags, but the most gorgeous colorful handbags in small branded boutiques. At the center of this captivating display is the escalator bank and soffit encased in mirrored, brightly colored glass. You feel like you are in a giant jewel box surrounded by luxury. Onward to the second floor and the relocated make-up department. It was worth the trip. The new displays are eye-catching and the space radiates energy. The windows are open to the Fifth Avenue, something we haven’t seen in a century, and the natural light contributes to the energy.
The renovated Saks Fifth Avenue has broken from the pack. A first floor of make-up and fragrance has been the standard for retailing since Harry Gordon Selfridge pioneered the concept in London and the beginning of the last century. Saks is following in his innovative footsteps by changing the department store experience, setting itself apart from the competition. The experience was delightful.
For something completely different, I went downtown to check out the new Showfield’s, two floors of retail and an art gallery on three. Ironically, Showfield's is experience retail for on-line brands. Yes, you heard that right, on-line brands are placing themselves in a brick and mortar environment in order to market themselves to an audience that a) may not have heard of them or b) likes to see, touch, and sample products before buying - and may even enjoy talking with a sales associate. Bonobos and Warby Parker, both successful e-commerce brands, launched brick and mortar retail to expand their businesses while these brands apparently plan to remain on-line only.
The Showfield's boutiques are small, maybe 10’ by 10’, and staffed with associates trained on the products. The boutiques will be ever-changing with new companies each month. The time I went there were mostly health and beauty brand, but also had a company with products for those who keep journals and one offering customizable pet food. The third floor art gallery was fun and included AR and VR installations. It also featured a corkscrew pipe slide to the second floor. I tried it. Faster than anticipated but worth the trip. This is truly experiential retail. The building, a former manufacturing loft is flooded with light and easily navigated. The crowd was very engaged which is a win. The value of bricks and mortar is proven once again.
As demonstrated by the above examples, no one innovation is going to ensure success in a disruptive retail environment. There is room for variety. That said, carving out a specific market is critical and delivering a genuinely enjoyable experience essential. This isn’t the first time retail has changed. Retail has survived malls and Walmart. Retail continues to thrive by adapting. The triumph of e-commerce is just another challenge, albeit on bigger scale. As New York demonstrates, if retailers keep an eye on their shoppers and deliver the goods they want in an engaging environment, they’ll prosper.
Editor’s Note: Dick O’Brien is a retail marketing specialist whose focus areas include software product development, service enhancements, product launches, re-launches, and overall marketing strategy. He can be reached at firstname.lastname@example.org.