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Bankrupt & Broken Retailers, Pt. 2: Why the average middle retailer did not survive 2015


Last week, we discussed the rapidly increasing decay of the average middle retailer in Canada, the USA, and the UK, highlighting some of the retailers that didn’t live to see 2016 in discussion and through an infographic.

Download the infographic on retailers that struggled in 2015

Today, we follow up with Part 2: What’s Happening to Retail?

Keep reading.

Part 2:

What’s Happening to Retail?


Plenty of retailers, researchers, and organizing bodies are very interested in finding out why this mass attrition of the average middle* is happening at a global scale. Others are desperately searching for a new foothold in this new digital economy that has come to dominate the marketplace.

*Average middle retailers: Those retailers that do not distinguish themselves on brand, quality, style, price, or any other number of factors. These brands are often seen as interchangeable with others by the consumer market. See this infographic for examples on who these retailers are.

And of course, then there are those who refuse to acknowledge that the golden age of retail is, in fact, over.

From our perspective at VL as data integration specialists and service providers for the omnichannel retail space, we’ve been able to distill from our research and experience three main, albeit simplified reasons for this recent acceleration of retail attrition.

1. Brand Identity & Customer Experience


Learn More About Customer Experience and Brand Identity in this Presentation

First and foremost, many of the brands that are no longer with us have one overwhelming commonality: a lack of a clear identity.

Aeropostale, once the height of high school and college fashion, recently announced they were shuttering their doors. But looking into who they are, you can see how they’ve struggled to define themselves over the years: they’ve had a history of defunct clothing lines and specialty wear that never resonated with the masses.

This bring us to our first point in why these brands went under: if you don’t know who you are as a brand, how is your audience supposed to identify with you?

This bleeds directly into the kind of customer experience you’re able to engender with your audience. Without a strong brand identity, customers have little reason to form an emotional bond with your brand. This is extremely important, especially if your brand occupies the average (and very competitive) middle. Without a strong draw for your customers to buy X product from you, these customers can be easily led away to a competitor with a better customer experience or a lower price tag.

Without a clear brand identity, no app or magic solution is going to save your business in this new retail landscape.

2.Too Much Spread


The second reason the average middle of retail is shriveling up: there are too many retailers occupying the average middle space. Once upon a time, this space used to be a boon. Today, Millennials are turning their parents’ generation’s standards on their head, bucking all former trends. Here’s one analysis on how retail ended up where we are today:

“The amount of commercial retail store space in the U.S. grew 12% from 1970 to 2010.  In a consumer-driven economy where approximately 70% of the GDP is dependent on the purchase of goods and services, this seems like a positive indicator of economic expansion and strength. But during that same time period, the population of the U.S. consumers only grew 52%.  So rather than being a sign of economic stability, the number of retail stores in the U.S. is more of a sign of retail store supply exceeding retail store demand.”

Again, the average middle includes those retailers that offer cheap products (usually clothing) at a palatable price (usually less than $100) without any other outstanding draw to keep customers coming back. As a result, one brand can be easily replaced by another. The savvy digital-age consumer has caught on to this play, and will buy these interchangeable products where they are cheaper (Amazon), or instead invest in a version that’s better quality (luxury).

The fat middle also has another area of wanton spread: in physical square footage. While some brands are opening stores that still hold to the 1990’s big-box model, most are looking towards smaller physical store footprints with less inventory on hand, instead with a focus on an augmented omnichannel customer experience.

For those brands on our 2015 list that haven’t gone completely under, this is the lesson they’re learning: it’s not about more stores, but the quality of the spread in the real and digital worlds. As you can see by our list, some of the brands that saw trouble ahead have cut their losses and have gone completely digital. Others have reduced their store numbers, and the ones that did survive the cut are being completely overhauled with the customer in mind.

Both of these options for revamp come with challenges: how does a retailer maintain a consistent brand experience?

Believe it or not, it all comes down to the apps that make your business tick, and how you integrate them and the data they produce and house together.

3. Late Adoption of Life-Saving Tech

While the platitudes of brand identity and great customer experience are nice, it’s fundamentally the tools that are put in place (or not put in place) that make the difference on actually fulfilling these strategic objectives.

The fact of the matter is that the brands that did not live to see 2016 were the same brands that didn’t get ahead of trends with actionable insight.

In Part 1 of this article, we touched on early adoption – and here, we stress it again.

Data integration is still in the ‘nice to have’ stage, but it won’t stay that way for long. Marketplaces like Amazon and eBay are kick-starting the trend by penalizing sellers who still insist on manually inputting data or have poor quality data integration, because they’ve seen how it effects the customer’s experience. Others are starting to follow suit.

But which solution to choose? Plug-and-play data integration connectors – those that you can download, install, and continue on your merry way with – are fine when you’re starting out or are small. But if you start to rapidly scale, you’d better have a strategy in place on how to manage your data and integrations – or have a partner like VL and our VL OMNI service at your back. VL OMNI is the pinnacle of data integration services: a high-quality, robust solutions for a very specific type of business at a very specific point in their growth.

So what can your business learn from all of this?

How to Survive 2016 (And Beyond)

The Ultimate Take Aways

Learn More About VL