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Facing a tough year, retail has been forced to evolve online and offline.
Multi-brand brick-and-mortar retailers are already up against competition from e-commerce natives, high acquisition costs, unpredictable inventory and demand, and tough profit targets. Now, they’re also dealing with volatile consumer behavior as high interest rates, rising inflation, rising energy bills and expectations of a recession have made shoppers less confident about the state of the economy. At the same time, online luxury retailers that saw an explosion in sales during the pandemic are facing consolidation and a downturn, meaning a review in strategy.
Despite the challenges, what is clear is that physical stores are gradually making a comeback. During the first six months of 2022, major US retailers announced 4,329 openings, a 1.9 percent increase over the same period in 2021, while there were 1,912 US store closings, down 58.1 percent from the same time. last year, according to the latest data available from Coresight Research. Overall, retail sales in June rose 8.4 percent year over year and 18 percent higher than before the pandemic, the U.S. Commerce Department said.
The formula for brick-and-mortar retail has evolved since the pandemic. Not only have customer expectations increased since experiencing the ease and flexibility that comes with online shopping, they also need enticing returns. Retailers need to work harder than ever, says Doug Stephens, founder of consultancy Retail Prophet. “Brands that can provide a fundamentally more fun experience for fashion consumers will respond favorably.”
Bigger brands, bigger experiences
This year, retailers stepped up their game to get people into stores. One of the biggest luxury retail projects of the year was Harrods’ takeover of the Dior store, which runs from December to January. With a cafe, comprehensive showroom, two pop-up shops and storefronts, it marks Harrods’ biggest brand acquisition to date, according to partnership director Alex Unitt. Since the initiative still has four more weeks to go, he’s reluctant to share achievement or sales metrics, but the response so far has been overwhelmingly positive, he says. “I think the multifaceted nature of the project means it has a broad appeal and something for everyone to enjoy.”
