My 2019 retail predictions: How’d I do?

Starbucks Roastery Tokyo

A year ago I went “out on a limb” with my annual predictions for the year ahead. As we move into 2020-and in the spirit of accountability-let’s see whether I hit the mark or not.

  1. Apocalypse? No. Here I channeled my inner Mark Twain opining that reports of physical retail’s death are greatly exaggerated. As expected, we continued to see many store closings and quite a few bankruptcy filings. I did think the pace of closings would moderate more than it did, but the idea of a retail apocalypse is clearly nonsense. Once again we saw positive growth in physical retail and many thousands of store open, including many from the digitally-native vertical brands that once said they didn’t need a brick & mortar presence.
  2. The collapse of the middle continues apace. As I’ve been saying for a few years now physical retail isn’t dead, but boring retail is. I’ve also pointed out that the vast majority of stores closings and bankruptcy filings are concentrated among those retailers that remain stuck in the sea of sameness. Good enough no longer is. You have to choose remarkable.
  3. The stores strike back. My premise, as I talk about extensively in my keynotes, is that when retailers think about their stores fundamentally as assets to leverage, rather than liabilities to optimize, they invest in them often to the benefit of the customer as they help neutralize some of Amazon’s advantages. The other key is to embrace the blur that is shopping today, realize the customer is the channel and execute a harmonized experience. It turns out those brands that leaned into this notion-Target, Walmart, Best Buy and others-did in fact deliver strong performance.
  4. Isn’t ironic? For DNVB’s now it’s mostly about brick & mortar. Everlane’s CEO Michael Preysman told CNBC what some of us having been saying for years, namely, that most of e-commerce is unprofitable and the future of the so-called digitally-native vertical brands largely rests on their physical store expansion strategies. So as predicted, the brands that raised gobs of venture capital on the premise that software eats retail, are now feasting on crow, announcing plans to collectively open hundreds of stores.
  5. Better is still not the same as good for Macy’s, et al. Despite trying a lot of stuff in the past few years, a slightly better version of mediocre is not a workable growth strategy-and it’s hardly remarkable. Macy’s and Kohl’s (and many other struggling retailers) keep putting lipstick on the pig. In a year of robust stock market gains, both companies saw their stocks decline significantly.
  6. It’s do or die time for JC Penney. This might have been a tad to hyperbolic, but it remains clear that Penney’s continues to struggle mightily. Despite a strong economy and continued Sears’ store closings, in the most recent quarter Penney’s saw sales decline 10%. Having shed 90% of its market value in the last 5 years, newish CEO Jill Soltau has made some progress, but much more dramatic results are needed. Soon. See above.
  7. An Amazon and Walmart showdown. Here I essentially predicted an escalating battle-and potential race to the bottom-as Amazon doubled down on last mile delivery and Walmart continued improving its e-commerce and harmonized retail capabilities. Amazon saw its profits take a hit, while Walmart plans to invest aggressively behind grocery pick-up and delivery. The showdown continues-and more and more includes Target. For consumers it’s a win; for investors, we will have to wait and see.
  8. The emerging BOPIS crunch. A big part of the “stores strike back” story centers on the success of BOPIS (buy online, pick-up in store) and, to a lesser degree, buy online, return in store. This capability, once shunned by many retailers as an expensive hassle, is rapidly becoming table stakes. While growth estimates vary, it’s clear that many retailers are experiencing a surge, which places increasing demands on store operations. So far, I have seen mostly anecdotal evidence of the strain this is placing on retailers. But this trend is not going away.
  9. Stores as theater. My vote for the most over-used-and ill-defined-phrase of the year is “experiential retail.” Some promulgated the notion that retailers need to start measuring “return on experience.” Other than the issue of usefully measuring the numerator and the denominator, that’s a fine idea. But retail concepts that are immersive, emotionally connecting and interactive-with the store as stage-continue to draw crowds, generate buzz and expand. See: Camp, Starbucks Roastery, Canada Goose’s “Cold Rooms” and more.
  10. Micro-markets start to shine. I came up short on this one. While brands that go narrow but deep on highly specific customer segments, communities and interests (Phluid, Eloquii, The Akola Project, et al) are growing and generating some buzz, this has not taken off (at least yet) as I anticipated.
  11. It’s the end of the mall as we know it, and I feel fine. Despite stories of the death of the mall, as like with most things, the future is not evenly distributed. This is not nearly the crisis many have made it out to be as many malls continue to do really well and the struggling ones are getting repurposed. As with store closings this is mostly about a much needed correction to the rampant over building of the past two decades.
  12. Wayfair crashes back to earth. Waywork, I mean, WeFair, will be the of the new wave of online shopping if investors come to their senses. At mid-year it looked like I really got this one wrong. But in the second half of the year the stock lost about a third of its value as folks started to realize that selling at a loss and making it up on volume is not a good strategy. But they didn’t crash. Yet.
  13. Voice shopping remains a yawn (for now). Lots of these devices are getting sold and being integrated into other systems. Did you buy much through yours this past year? Nah, I didn’t think so. Stay tuned.
  14. Better metrics start to emerge, albeit too slowly. Well I got the slowly part right. The focus-at least publicly-on channel-centric performance measures and sales/square foot remains intense, despite their limited usefulness. You would think studies like the ICSC’s Halo Effect might start to change things. So far, not so much.

So I think I got the big calls mostly right, while largely coming up short on the more speculative predictions.

Next week I take a crack at 2020. Spoiler alert: I’m still bearish on Wayfair.

A version of this post recently appeared at Forbes, where I am a senior contributor.

January 9th – 14th I will be in New York keynoting the Retail Orphan Initiative fund-raiser and attending various NRF related events.

Check out my brand new speaker sizzle reel here.

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