The future of retail, according to a millenial

July 14, 2020

As a millenial who buys from the big resellers ie. eBay, Thredup, Poshmark, physical thrift stores, and enjoys the occasional mall experience. I’ve seen the retail landscape shifting from malls to online, from new to second-hand. Here’s how the retail experience can survive the global covid epidemic and compete with Amazon.

The middle market need to partner with the second-hand market

Luxury will always be there for people who want the latest flashiest things. Big discount stores like Ross will supply necessities for instant gratification. The second-hand market including online resellers and physical consignment stores will eat into the discretionary middle market; why buy something mass produced, when you can get a unique find at a similar price instead? If the middle market ie. stores like Macy’s and Nordstrom want to keep up, they need to include resellers into their midst. Malls can also benefit from a storefront with second-hand stores ie. theRealReal: the fast-changing nature of reseller’s goods can increase traffic.

End of fast fashion???

As a value shopper I don’t see the value proposition of fast fashion. The goods are often low quality, the style does not last beyond a season, and it is horrible for the environment. Perhaps some find the price point attractive, but paying a bit more is worth it for a higher quality, more durable good that can be resold.

Better fit for clothing or shoes means more $$$

High-end stores will measure a potential customer and provide recommendations based on the measurements; storing measurements is easy to do, yet many stores, both online and physical, don’t store them, even though they have an account on the customer. The better the fit, the more the customer will pay. Stores are leaving money on the table because what they sell don’t fit. Physical stores can go even further and provide tailoring service to increase value.

Limitations of the online experience

Customer service for online storefronts are limited; have a problem with the order? It is chat or email only, which might resolve the issue but provides no opportunity for upsell. Shipping delays means instant gratification becomes delayed, slowing down the positive feedback loop. Shipping is bad for the environment, and the increased costs mean online shopping cost more than thrifting locally. High end customers are willing to pay for a better online experience, such as those who go to Equinox and purchase a Peleton; I’m fascinated by their fervent community who shell out $200+/month for a gym membership, and $2000+ for a bike, with monthly payments for content.

Why I’m bullish on physycal storefront

Can you imagine Apple selling the $2000 iPhones without a wonderful physical presence? I can’t either. The physical storefront used to be a prerequisite for great service, since positive interactions with the employees can lead to repeat sales and upsell. While online experiences have been catching up (such as Peleton customers), the high-end stores will continue to have a physical presence. Many customers will pay more for a proper fit, and the shopping experience facilitated by a real person.

How malls can thrive with locals

Similar to hotel chains that offer loyalty programs, the malls can provide a reward program that encourages shopping, exercise, tailoring, and more services bundled together. The more you spend the more you save. The mall can also be a place for people to sell their goods via pop up stores or partnerships with resellers; the fast turnaround of goods and stores means there are more to see per visit.

The retail landscape seems to change every day, accelerated by the global epidemic. What doesn’t change is good customer service to provide value, such as knowing the customer’s measurements and tailoring for fit. The online experience contiues to evolve upwards into the high end market. The middle market is changing with integrations of indie designers and resellers; it is a tough place to be in, squeezed by the resellers and the low low price of fast fashion.

Retail is a fast changing space with lots going on. Whatever happens, it won’t be boring.