Weekly Success Digest #7 – Retail

You may not know this, but the mall is in trouble. The retail sector in the United States is sailing in some choppy waters, but the malls and brands who make it offer lessons for success.

(TL;DR – there are actionable tips from successful retail turnarounds at the bottom of this article.)

A year ago, Wall Street analysts were predicting that one quarter of the nation’s shopping malls would close within five years. No new mall has built in the United States since 2006. There are already too many malls, with an estimated 26 square feet of retail for every person in the United States! Malls were built as a destination; you park with the idea that you’re going to amble around, spending a few hours shopping, eating, and meeting. Younger shoppers are fast-paced, online (“there’s an app for that”), and not interested in the kinds of commercial and social opportunities a mall offers. With less people going to malls, sales have dropped off a cliff, and retailers are starting to declare bankruptcy in snowballing numbers. You can see a list of shuttered malls, occasionally with pictures of what they look like now, at the deadmalls website. There’s something haunting about seeing abandoned malls falling apart, when they were once so full of life.

Where Do Malls Come From, Anyways?southdale mall 1960s

The modern shopping mall was conceived by an architect named Victor Gruen. The first mall he created, the Southdale Center in Edina, Minnesota, opened in 1956. Southdale is still open; to visitors who don’t know its history, it looks exactly like any other shopping mall in the nation. Southdale was the first double-tenant-anchored, enclosed, multileveled, central-garden-under-a-skylight shopping mall – and pretty much every single shopping mall built since then all over the world copies it exactly.

Gruen’s goal was to remake America’s suburbs. He wanted wanted the shopping mall to be the public square for a new suburbia – surrounded by housing, and complete with civic things like schools, post offices and daycares. His creation backfired, in that sense, as malls turned into bigger causes of sprawl than the old retail areas and never incorporated the public square concept that was so central to his vision. By 1980, Gruen was angrily insisting he was fed up with what his creation had become and publicly disowned them. As Malcolm Gladwell put it succinctly in his profile of Victor Gruen, “Victor Gruen invented the shopping mall in order to make America more like Vienna. He ended up making Vienna more like America.”southdale mall 1960s exterior

How Can Malls Adapt?

In business, adaptation is necessary for success. The famous consulting firm McKinsey and Co published a white paper outlining how malls will have to change to adapt and evolve with the times. Malls will never be able to compete with the endless product supply of web based commerce, but they can utilize their physical presence by creating a shopping experience for consumers they can’t get online. This can be done with attractions, like indoor ski ramps, aquariums, museums, arts centers, and such. It can be done by creating “downtown” style spaces with eateries and gyms and themed “streets” of similar segments of stores. However a mall chooses to revamp itself, it needs to provide a value for customers more than “here are a lot of stores in one place,” as they used to. The internet has all the stores in the world in one place now. And when a retailer does choose to face the music, McKinsey has a how-to guide for retail turnarounds, too.abandoned mall

Success: How To Turn Around

macy's logoMacy’s took a hard look at their business, starting at the ground up. They began with “customer journey mapping” which looked at their customers experience, identifying the “pain points” in the shopping experience. With this, they built “customer personas” that put together customer’s values, needs, and key characteristics to better tune their stores to the people walking into them. Macy’s made the necessary changes to their stores to address these concerns; they addressed checkout and pricing confusion, among other issues. Any manager, and especially project manager, can take a page out of the Macy’s playbook: zoom in on the pain points, identify the main issues that are holding back growth and progress, and incorporate the data collected into the path forward to solving the problems. Macy’s isn’t completely turned around yet, but they are moving forward, with momentum, towards success now.

art van furniture logoKim Yost, CEO of Art Van Furniture, has a list of eight tactics for a turnaround situationSome highlights include:

Go for small wins – building momentum to solving bigger challenges starts with small victories.

Draw it on a napkin – if it won’t fit on a napkin, it will be too complicated to execute. Make things simple to understand for the team!

Personify the customer – just like Macy’s understood, you need to know who your customer is in order to provide them with what they’re looking for.

ashley stewart logoAshley Stewart, a woman’s apparel brand, turned themselves around under the leadership of James Rhee – how he did it has lessons for anyone in management. James works hard, mingles among his employees instead of sitting in an office, and asks questions even at the cost of seeming stupid.

best buy logoBest Buy is an electronics retailer – and is thriving, even though competitors like Radio Shack and Circuit City went bust. Best Buy tackled their main challenges head on. By matching cheaper online prices, striking deals with manufacturers to create sections of stores to highlight their products, and utilizing their beloved Geek Squad, Best Buy went from a place people tried out electronics before buying online to a trusted retailer people wanted to shop atFace your challenges head on, make the adjustments you need to no matter how painful they may be, and success will follow.