The Economist on the future of retail – playing out in a mall near you if you live in the United States, ever the over-heated laboratory for this kind of thing. Summary: it’s roll reversal time for the retailers. Traditionally mall-bound department stores (Sears, for instance) are moving out of town and building multi-acre warehouses. The warehouse types (Walmart, Target) are taking over the abandoned multi-floor mall sites always thought to be too expensive to operate for a discounter.
Downtown department stores are turning into ‘showcases’ (like Selfridges in the UK) where more than half the floor space is stocked and managed by third parties. Supermarkets are leveraging huge purchasing clout and customer base to take business from everybody. Scrappy specialist retailers are filling gaps and stealing margins from the old-fashioned stores who are stuck with thousands of unprofitable lines they have to keep for their old-fashioned customers – and they’re worried.
George Jones, CEO of venerable Saks, says: “the model is so illogical. The model is messed up. There’s a real win out there for a company that can break out of that mould.” This is gripping stuff, at least partly because we all do retail all the time – it’s like breathing (name a day in the last month when you didn’t enter a shop – real or virtual). Show business was never so exciting (and I bet he didn’t say ‘messed up’).