Along with our opposable thumbs and our penchant for self-destruction, shopping is without question a curious part of human nature.
The pressure mounts in mid-August with enticing back-to-school sales. Soon after, Halloween shopping promotions are launched before the end of September. However, these retail efforts to drive revenue pale in comparison to the post-Thanksgiving excitement around the annual Black Friday bargain bonanza. For decades, this has marked the beginning of the year-end holiday shopping season and is so named because retailers begin to climb out of the “red” and enter the reassuring realm of “black,” to turn a profit at year’s end.
Unfortunately, store closures continue to plague the retail sector, and even Black Friday won’t be enough for some brands. Technology and consumer shopping preferences are resulting in rapid changes in the retail industry that will likely mean the demise of legacy companies. Major retailers such J.C.Penney, CVS, Abercrombie & Fitch, Radio Shack, and Macy’s all announced significant store closings this year.
The real retail milestone for 2017 was when in June, Amazon announced the acquisition of high-end grocer, Whole Foods. The 13.4 billion dollar deal had a riveting effect on retailers everywhere. How would this acquisition impact the retail business in general? What would be a best-case scenario for commercial real estate?
I posed these questions to Hap Stein, CEO of Regency Centers, one of the largest commercial real estate developers in the country. With 400 shopping centers, containing nearly 60 million square feet, much of which is grocery related, someone like Stein must continuously calibrate his focus on the retail radar.
“Obviously we have given a lot of thought to the recent events in the grocery industry which could significantly impact our business,” said Stein. He also cites “compression on grocer’s margins,” market entry by foreign brands such as Germany’s Lidl, and Amazon’s agreement to purchase Whole Foods as significant factors.
The Amazon/Whole Foods deal has proven to be beneficial for customers. Shortly after the acquisition, the New York Times went comparison shopping and realized a 14% drop in prices at Whole Foods. This is a textbook case of a land grab, volume-driven approach adding to the expanding market share of everything in Amazon’s portfolio.
A tech titan like Amazon is certainly a brand to contend with, but as in every “David and Goliath” battle, might is not always the winning strategy. One could imagine that in addition to David’s expertly flung stone it was Goliath’s fall and massive bulk that killed the giant. So, in the current retail contest what are the best defensive “stones” to be used by traditional retailers?
As a legacy retailer with over 50 years of experience, Hap Stein offers some perspective. “Amazon’s purchase of Whole Foods should be positive for Whole Food’s bricks and mortar stores. There is every reason to believe that Amazon will fully support and enhance Whole Food’s mission and brand of being the finest natural and organic grocer.” He also embraces this new reality and is ready to see the positive effects this will have, commenting, “Amazon’s opening of book and grocery stores reinforces our conviction around the importance of retailers having a successful omnichannel and 'brick and clicks' strategy.” Even with the tremendous conveniences that technology offers, Stein is well aware of simple, practical advantages that traditional retailers have noting that “The evidence that Amazon sees the need to have stores convenient to their shoppers for delivering goods, particularly perishables and prepared foods, 'the last mile,' remains difficult and costly.” This is where the localized strategy of physical retail stores becomes essential.
Even with the rapidly increasing popularity of e-retailing, customers remain social beings that see shopping as both task and entertainment. Since the age of medieval markets, interacting with other people while purchasing goods and services, has always been part of the shopping experience. Ensuring that you are accurately projecting your “purpose and promise” is where expert branding plays a role in success. Building a distinctive content strategy, a compelling design strategy, and a dynamic digital strategy provides some of the “stones” that will help level the playing field and optimize a customer's experience with a brand. Without these in place, a brand risks being an “also ran” or altogether forgotten.
On Black Friday, people will have hardly digested their turkey dinner before they will be storming into retailers to take advantage of this season’s sales. It’s a human phenomenon that seems to know no cultural boundaries in the modern world and brings out the best and worst in people. The hope each year is that everyone benefits from the experience with retailers meeting their profit goals and customers happy that they have colorfully wrapped bargains for the holiday gift season.
Of course, if you’re not brave enough to face the masses on Black Friday, no worries, there is always more to buy on Cyber Monday!
Ken Carbone is a founding partner and artist-in-residence at Carbone Smolan Agency in New York City. He is the co-author of Dialog: What Makes a Great Design Partnership and a recipient the AIGA Medal for lifetime achievement. Regency Centers is a former client of CSA.