Is It Time to Become Uncomfortable?

"In the U.S., they're cutting corners and cheating, and driving everything to the lowest common denominator - in the brands themselves and in the channels of distribution: department stores, shopping centers. And it's reached the point of no return, which means that retail in the U.S. will have to reinvent itself," claims Value Retail's CEO Scott Malkin in a recent Glossy interview.  Value Retail owns  and operates 11 luxury outlet centers in Europe and China. 

 

Malkin explained that it is impossible to have a culture where no one ever pays full price and still make money in retail.  Luxury brands such as Gucci and Givenchy no longer offer sale products at their full-price brick-and-mortar stores.  Malkin asserts that you can't be a luxury brand and discount.  He also believes that luxury brands should avoid Amazon completely.  "Everything that makes Amazon brutally efficient and successful precludes their ability to work with luxury brands." 

 

Malkin questions what an acceptable experience might look like in the future, when consumers could arguably be printing their clothing or shoes in their own living rooms.  The only reason why consumers will visit brick-and-mortar stores in the future will be directly tied to the quality of the customer experience and will have less to do about products. And the quality of customer experience is tied directly to the ability of sales professionals to connect and deliver experiences that will motivate consumers to leave the comfort of their homes. 

 

Malkin views his business differently from other shopping center owners.  "We're in the tourism business; we're in the business of creating experiential destinations that happen to sell merchandise and we've embraced elements in our culture that have nothing to do with shopping centers or retail." That helps explain why he recruits employees from the hospitality industry, events industry, nightclubs and high-end retailers. Eighty percent of his 1200 team members previously worked at Gucci, Prada, Dior, Ralph Loren and/or Tommy Hilfiger.

 

Malkin believes that retail is fundamentally about fashion and fashion is fundamentally about women who shop touristically.  Luxury experiences can't be mass produced - they need to be curated and customized.  That why it is virtually impossible to have exceptional sales professionals in a discounting environment and hope to survive. To appeal to human beings' five senses to deliver outstanding customer experiences requires relying on art as much as science, commitment and passion as much as logic.  This assessment parallels guidance offered by Doug Stephens at the 2017 DPHA Annual Conference. Appealing to a customer's senses and delivering exceptional customer experiences are challenges that all retailers face, including decorative plumbing and hardware showrooms.  

 

Malkin claims that human nature is the primary reason why most retailers and shopping centers will not change.  They are opting instead to invest in new technology, apps and machinery with little to show for those investments.  Change is difficult, especially when you have had a track record of success, and investing in technology is easier than inventing an uncomfortable culture.  The fact remains that the way people buy has fundamentally changed.  Product is no longer the driving reason why someone will get off the couch. 

Does your culture need to change?  How are you embracing your customer's senses and making your customer experience the reason why someone would make a special trip to your showroom?