October 20, 2023 • 41 mins
Is the era of department stores finally ending? Join us in a thought-provoking conversation with department store and specialty store expert, Jeff Sward, as we dissect the downfall of department stores from a booming 10% market share to a staggering 2%. We take a hard look at TJ Maxx and similar discount store business models that have successfully capitalized on this downfall, leaving us to wonder - does TJ Maxx have the most bulletproof business model in contemporary retail?
Transitioning customers, dwindling sales, and the struggle to maintain brand image - department and specialty stores are in the fight of their lives. But there's no space for doom and gloom in this episode. Instead, we analyze the transformation strategies that these traditional retailers have adopted to compete with the likes of discount stores. We examine the role of sales and discounts, consumer psychology, and the potential rewards of a business model with fewer sales. Dive into the world of brand reinvention as we shed light on Abercrombie & Fitch and Ralph Lauren's recent brand revamps. We wrap up by exploring the future of department stores, and the inevitable reinventions that need to occur for them to remain culturally relevant. Brace yourself for an intriguing deep-dive into the turbulent tides of retail.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:13):
Welcome to the Retail Wire podcast.
On today's episode we have aninterview with Jeff Sward.
We're going to learn a lotabout his expertise and we're
going to dive deep into a topicthat he wrote about on
RetailWirecom about TJ Maxx anddiscount store business models.
Looking forward to jumping in,Jeff, how are you doing?
Speaker 2 (00:34):
I'm doing great.
Good morning, Chase.
Speaker 1 (00:36):
So tell us a little bit about your role in your
background, just so thelisteners know what perspective
you're taking.
Speaker 2 (00:44):
Sure, I started in the department store business
with a division of FederatedDepartment Stores many years ago
, long before any of theconsolidations.
I spent about 14 years atBullocks in Los Angeles, went to
Macy's, saks, fifth Avenue,abercrombie, fitch and American
(01:05):
Eagle Outfitters, so I was verylucky to have both the
department store and specialtystore background in there and
then made the jump over towholesale with Oxford Industries
and I had roles in PolaroidFlooring Boys and Donna Karen
Girls, and then my last role atOxford was group president for
(01:27):
merchandising and design andthat was for our whole private
label and product developmentbusiness.
So I've had the good fortune tohave a number of different
exposures in the business.
Speaker 1 (01:39):
Well, that's a lot of experience to back up some of
your latest insights.
One of the things that we wantto talk about today is the
article you wrote, and it startsout by saying the demise of the
department store has beenhappening for longer than many
people realize, and youmentioned the internet and
(02:02):
e-commerce.
And then there was a graph thatyou saw that really helped you.
It says I didn't fully graspthe degree of this shift until I
saw the graph below.
Tell me more about that.
Were you researching at thetime?
How did you come across thisand what was the realization you
had?
Speaker 2 (02:24):
It was really just part of my daily scrolling
through different businessarticles and just kind of
general background reading, andI saw these two graphs and I
really found them quitemesmerizing in that, having
lived through this evolution andthis demise, if you will, of
(02:49):
department stores, I neverreally fully recognized the
degree that the role of thedepartment store had 20 and 30
years ago and has today, thedollar sales decline.
But what really caught myattention was going from almost
(03:12):
10% market share to these days2%.
That just took my breath.
I started to do a littlehomework and looked at then the
growth of TJ Maxx and Ross andsome of the other off-pricers.
It was just they didn't tradedollars dollar for dollar, but
(03:35):
as department stores were doingthis, the off-pricers were doing
this.
And what struck me was thatit's one thing to say, well, of
course the department stores andlots of retailers lost business
to the internet, but duringthat whole window the
(03:56):
off-pricers weren't driven bythe internet.
That was physical retail, foottraffic, getting your car go to
the store kind of business.
So literally the mall waslosing not just to the internet
but the mall was losing to thediscounters.
(04:18):
And then what really kind ofshook me was the understanding
and the realization which I'vehad for a while now, but this
kind of put an exclamation pointon it was that the way that
market works, in that thediscounters, the off-pricers,
(04:40):
literally live on the excessinventory of the mall retailers,
either at the factory level orat the store level, that the
department stores over the yearsand the mall retailers in
general have been continuouslyfeeding the growth of the
(05:04):
off-pricers season after seasonwith their ending inventories
that they wanted to liquidate.
They just serve it up to TJMaxx and TJ Maxx says thank you
very much and their businessgrows and thrives.
And I'm oversimplifying alittle bit here, but I think
(05:26):
that's the essence of the model.
And then I read an article fromjust a couple of weeks ago where
the CEO of TJXx was saying howhe's looking forward to the
abundant opportunities in themarketplace for further market
share growth, which means themall retailers are going to
(05:49):
continue to feed TJ Maxx all ofthis excess inventory.
And you know.
So I kind of asked myself thequestion what would it take for
TJ Maxx to have a tough year?
Because when everybody else ishaving a tough year, that just
means abundant inventory for TJMaxx and customers looking for a
(06:15):
bargain.
So that works okay for them In agood year.
There's still plenty of growthto go around.
So really, what would it taketo have for TJ Maxx to have a
difficult year?
And that's where the headlinecame from.
Is that, you know, does TJ Maxxreally have the most
(06:37):
bulletproof business model inretail today?
I kind of just marveled at thewhole scenario when I really
stepped back from it and lookedlike it like that.
So yeah, therein, you know, wasthe premise for the whole
article and I really had hopedit would percolate some very
(06:59):
energetic conversation and itdid.
Speaker 1 (07:03):
So there are different perspectives on this
too.
Some might say that thedepartment stores had it coming
due to their failure to adapt.
What's your response to that?
Speaker 2 (07:14):
Completely agree.
You know, again, I wasoversimplifying a little bit in
that I think department storeshave relied on a basic business
model and a basic physicalretail presentation that dates
back to the 80s and 70s and 60sof the prior century and they
(07:39):
literally have not evolved, youknow, in a manner that makes
them more current in their roleas an omnichannel player versus,
just, you know, basically, whenthey did not have the internet
as competition.
They have not evolved.
(08:01):
So it really one magnifies theother in that, you know, they're
losing this giant chunk ofbusiness to the convenience and
the breadth of offering on theinternet is one giant siphon.
And then the other siphon iswell, you know, whatever's
(08:25):
available in the departmentstores is available sooner or
later at TJ Maxx at a fractionof the price.
So as a customer, I just haveto be a little bit patient and
I'll visit TJ Maxx.
So the department stores,really, they got a double whammy
on that whole thing, andtherein lies their slide from
(08:45):
10% of market to 2%.
It's a tough, tough hit.
Speaker 1 (08:52):
You know there's that advantage of having a
consistent source of discountedsupply and who did most of the
brand equity building right?
It's not TJ Maxx who starteddoing advertising and helping
boost some of these brands, thebrands and the retailers at the
(09:15):
department store level.
We're pushing these brands inbuilding up that value.
Do you see a connection tothere?
It's almost like discountedphysical goods but also kind of
a very cost-efficient brandawareness for the brands that
they carry.
Speaker 2 (09:32):
Yeah, I think you put it quite quite nicely there.
Department stores spent decadesbuilding up the perception of
brands in the eyes of consumersfor either moderate or better
goods, and TJ Maxx really didn'thave to do any marketing other
(09:55):
than we're here for value, valueand low price.
So all of the brand equity, allof the perception, was invested
in and built by the brands andthe department stores and the
mall players.
And again TJ Maxx said thankyou very much for building all
(10:18):
that great brand equity andeverything.
We will now happily offer allthat product at a deeply
discounted price.
And you know, in the beginningI think it played beautifully
because in the beginning,meaning 20 and 30 years ago,
brands and retailers toldthemselves that the TJ Maxx was
(10:41):
invisible, that there were sofew outlets selling the stores
that it really wasn't an issuethen, and it happened to be a
really efficient way of gettingrid of excess inventory and, by
the way, in the beginning, nothaving a constant presence of
(11:03):
sale on the floor.
At some point you remove it, itgoes away to TJ Maxx and the
department store floors then canbe maximized for regular price
selling.
Well, that's not the marketthese days.
It seems like everything is onsale all the time anyway, and
(11:26):
it's just that.
Well, so is TJ Maxx, but atprobably lower prices.
So, yes, tj Maxx was able totake advantage of all of that
brand equity that everybody elsebuilt for them, that they could
simply just then, you know,offer the product in their
(11:47):
stores with, by the way, nothaving to invest in elegant
fixed ring or elegant shops orany of the other you know better
levels of presentation.
They put it all on racks andthe customer is happy to say
thank you.
Well, I'll go on my treasurehunt now.
(12:08):
So, yeah, that treasure huntmentality was just a beautiful
thing to watch evolve.
Speaker 1 (12:17):
Well, I can't help but connect the dots there with
today's forms of user generatedcontent or kind of lower quality
advertising that looks moreauthentic.
The pattern I'm seeing ispeople associate more authentic
brands and sometimes a betterdeal, better prices, when
(12:40):
there's not a high glossyadvertisement or a very
expensive looking commercialright.
And it works well for certainbrands that want to play the
value price angle.
It probably doesn't work thatwell for selling a BMW.
Speaker 2 (13:00):
Yeah, I can't really speak with authority on that.
I look at a lot of usergenerated content and I find it
amusing and entertaining, but Idon't necessarily view it as
brand building in the way that Iused to.
(13:21):
To me, let's face it, I'm aboomer.
I grew up in literally thestock rooms and the selling
floors of retail in a veryhands-on manner.
So to me, brand building a hugepart of a brand loyalty for me
(13:46):
is experiencing the product inperson in my hands.
Again, I'm used and entertainedby everything I see online, but
to me it's not really realuntil I experience the product
in person.
So it's additive to the wholething, but I can't say that I
(14:13):
relate to it like somebody let'sface it several decades younger
than I would be.
Speaker 1 (14:19):
Yeah, but in a TJ Maxx, the way the displays are
set up, it's really nothing toofancy and it gives you that
feeling of I think I'm gonnafind something.
Like you said the word treasurehunt, I think I'm gonna find
something that's unique.
Even if it's not, it just feelslike you're gonna discover
(14:41):
something new because it's notset up in a visual way that
amazes might set up.
Speaker 2 (14:49):
Right, I, you know, look, I still go to TJ Maxx
every now and then because ithappens to be down the strip
mall from my grocery store and Ifigure, from both a personal
and a professional point of view, I'm just gonna go spend 10 to
15 minutes and see what's there,and sometimes I buy something
(15:13):
and sometimes I don't.
But it is the curiosity aboutsaying to myself I wonder if
I'll find something today.
And you know, I don't have thatsame level of curiosity about
the mall or about departmentstores.
(15:33):
I do about a couple ofparticular retailers.
But in general I don't havehigh expectations when I go to
the mall.
And it's not even that I have ahigh expectation when I go to
the TJ Maxx.
But if I find something it'sbecause it really is.
(15:55):
I guess it goes to the treasurehunt mentality.
I really wasn't expecting tofind anything but oh my gosh.
You know, look at this gem I'vefound and look at the great
value it's.
You know the whole treasurehunt thing is a tough phenomenon
(16:16):
to describe, but I think it isa huge part of what makes TJ
Maxx tick and all the otheroff-pricers.
Speaker 1 (16:26):
It sounded like this advantage was just handed to the
discount or the off-priceretailers.
Do you think that thedepartment stores selling to
them knew that they were givingthem this advantage?
You said that they saw them asinvisible, not really a threat,
but do you think many in thosepositions were thinking this was
(16:50):
a threat that we should beaware of?
Speaker 2 (16:54):
I think it's classic frog and boiling water scenario
in that in the beginning, again,it was a relief just to be able
to get rid of the inventory andthe sheer number of off-price
outlets wasn't a threat.
(17:14):
And then over the years thewater kept getting hotter and
hotter and hotter.
And then one day everybodywakes up and says oh, the
water's boiling.
Wait a minute, I'm in trouble.
And I think you know, forinstance, when Macy's, within
their own four walls, did thoselast call departments where they
(17:38):
segregated all of their salegoods and put them into one big
room.
And then there's the other endof season offering that they've
got this name escapes me for themoment, but Macy's literally
tried to create the TGMXoff-price phenomenon within
(18:01):
their own four walls.
So you know, in a way I thinkthat was both brilliant and its
own problem, in that it's nowall of a sudden that much easier
for the customer to walk rightby all the regular place stuff
(18:21):
and back into the sale room.
But at least they're walkinginto the Macy's sale room and
not TGMX.
So it's a damn if.
I do damn if I don't scenario.
Speaker 1 (18:37):
Do you see any of the customers transitioning from
being a full-price buyer to anoff-price buyer?
I mean, a lot of times peoplewould say these are two
completely different segments sothey might walk past the full
price to that sale stuff.
But are you seeing any patternswhere people who normally would
(19:02):
buy the full price they'regoing well, why would I buy full
price when I can get the samething kind of in the clearance?
Speaker 2 (19:11):
That's a little bit difficult to answer because you
know, I guess I view a store atthe Nordstrom level as to still
be a department store thatoperates on selling product at
regular ticketed prices.
When the customer walks intoNordstrom, they expect, or at
(19:31):
least they're willing to pay,full price, because that's the
game at Nordstrom.
When they walk into Macy's theyare immediately greeted by sale
signs or discount signs of somenature on an overwhelming
number of the fixtures.
(19:52):
So immediately the internalcompetition just between this
fixture and that fixture inMacy's is immediate competition
between regular price productand sale product.
Or when I get the email fromany given retailer that says
(20:14):
wait a minute, why did?
Speaker 1 (20:18):
they have to earn your business when you were
about to shop.
Speaker 2 (20:21):
You're not even gonna try to sell it at regular price
.
It's new and it's instantly onsale.
And that is the kind of theretailer malady these days, that
if they don't offer some levelof promotion or discount or Bogo
(20:42):
or something, then either thenext store does or the next
fixture in their own store does,and I don't know how they
extract themselves from thatscenario.
Speaker 1 (20:58):
Well, the psychology of a consumer and we're all
consumers.
And so when I see a discount onsomething when it just came out
, I'm thinking, well, why didthey artificially put that?
Why did they put it so high?
You know, if it really isvalued here and if I'm trying to
(21:23):
sell something, yeah, the firstattempt really should be convey
the value and have someone buyit for the value that you've
placed on it.
It's a little bitcounterintuitive.
It kind of makes it look likeit didn't sell for that or it
shouldn't have ever been pricedthat high.
Speaker 2 (21:46):
Well, right, and I think that's the corner that so
many retailers have paintedthemselves into that the
prevalence of sales anddiscounts and promotions is so
ubiquitous that if you as aretailer aren't offering some
(22:09):
level of your own sale ordiscount, then the customer is
just gonna walk 10 feet then tothe next store.
So you know, I think there aresolutions, but I think that it
means that stores would probablyhave to shrink in sales as they
(22:30):
forgo promotionally drivenbusiness.
But it might mean that theycould do more business at higher
margins.
Might be less business overall,but it would be a healthier,
more profitable business.
That would be better in thelong run.
I guess I'm thinking about theMacy's move from full line huge
(22:56):
department store mall baseddepartment stores to smaller
footprint strip mall locations,which I think is absolutely the
right move.
But if all they do is take thesame merchandising and sale
(23:16):
driven posture in the smallstores as they do in the big
stores, then that's just kind ofa real estate strategy.
It's not a reinvention of thebusiness strategy.
So again, I think there aresolutions, but I think
(23:38):
ultimately those kinds ofsolutions are gonna be scarcity
driven.
So that you know, there's awhole what I call limited
edition kind of thinking whereas a retailer I'm gonna say,
look, I'm only gonna offer somany of these items and they're
this price and when they're gone, they're gone Now.
(23:58):
So that in itself limits thesales upside but it does protect
the image of the brand.
I think in saying that, youknow, I'm gonna make myself
distinction, make myselfdistinctive, simply by saying
(24:20):
I'm gonna offer, you know, moredistinctive product on a limited
edition point of view than justhaving rack after rack after
rack of goods with a sales signon top of each one.
So I think that you know, thepursuit of growth has, you know,
in this whole subject ofoverconsumption and that whole
(24:42):
thing has really been acomplicating factor for retail
Felt good while we were doing it, but it kind of put us in a
tough spot.
Speaker 1 (24:53):
Is there a pattern as department stores grew and
malls kind of grew?
It's like you become a largemarketplace and there's this
assumption that you have toserve every kind of customer so
you no longer have.
When you talked about, I'mthinking of Dillard's because we
have a Dillard's nearby, butyou said Nordstrom.
(25:14):
There's an assumption that youwalk into a Nordstrom and you
are looking to pay more of aregular price, not so much of
the sale driven and because theyhave a large footprint.
Is there more of an assumptionthat they're more of a
(25:35):
marketplace for everyone andthey have to have options for
everyone?
Would a smaller footprint storeplay better into full price,
just like a luxury boutiquewould?
Speaker 2 (25:48):
I think there's probably a role for both large
and small footprints.
I think that's more market sizeand demographic driven.
I think what you're talkingabout is more of a how does a
retailer want to define theirbrand promise?
(26:09):
What kind of boundaries do theywanna give themselves?
And I think a lot of retailersover time kept thinking that
they should stretch theirboundaries both up and down.
Speaker 1 (26:25):
Yeah.
Speaker 2 (26:30):
I understand the temptation to do both, but I
think that what has happened isthat people say that the market
has just flat out bifurcated.
Anyway it's either Nordstrom orWalmart and the whole middle
(26:51):
has just collapsed.
And, speaking as really as acustomer of what would still be
the middle market, I mean asmuch as I like to shop in
Nordstrom every now and then.
I would really much rather shopat a Macy's or a Dillard's or a
(27:11):
, but the attitude is almostwell, I just might as well go to
TJ Maxx because what's offeredat Macy's isn't special enough
and I don't have the sameappetite for Nordstrom or the
(27:33):
product as I used to.
So the definition that aretailer wants to create for
their brand promise I think mostretailers need to revisit that.
I think a retailer that has donewell two retailers that have
done an outstanding job at it isAmerican Eagle Outfitters, who
(27:58):
have a focused customer thatthey talk to and I think they
talk to them brilliantly andconsistently, and it happens to
be a retailer that hascontinually very little end of
season inventory.
And American Eagle Outfittershas stayed pretty consistent
(28:20):
with what they've been all aboutfor at least 25 years, and I
worked for them for a littlewhile, so I have some feeling
for what the DNA is there.
The other retailer that I thinkhas done a really good job is
Abercrombie and Fitch.
Again, I worked for them for alittle while, a long time ago.
(28:44):
But if you watch howAbercrombie has redefined their
brand promise and redefined theattitude and the aesthetic that
they use to talk to thatconsumer, I think it's been a
brilliant kind of reinvention,of a refocusing not up or down,
(29:08):
but just kind of a refocusingand a reinvention of an attitude
and an aesthetic where they'vegot distinction.
They can no longer be confusedwith American Eagle Outfitters
For a while there, if you linedup Abercrombie and American
Eagle and Arapa Stahl and Pax.
(29:33):
Sun.
They were all on one continuumof genes and hoodies.
Speaker 1 (29:39):
I remember that.
Right 2005 to 2010.
Speaker 2 (29:45):
Exactly, exactly, and that worked okay for a while,
but for a lot of reasons,abercrombie had to reinvent
themselves and now look at theresults they're getting.
They're now getting terrificresults again as a result of
redefining their boundaries andtheir attitude and their
(30:08):
aesthetic.
So, but, man, they went throughsome tough times to do it, but
I give them huge credit for whatthey've accomplished.
Speaker 1 (30:18):
Well, you make a I love this topic because everyone
goes through tough times but itdepends on what you do with
that and if you kind of have aminor freak out and change your
brand and go this way or go thatway, or if you stay the course.
I don't know where Arapa Stahlwent.
(30:38):
I think they went discount Like.
I always remember them as likethe cheaper alternative to
Abercrombie and American Eagle,and I don't know where they went
.
But I know when I traveled inLatin America I went to South
America and Central America Ihadn't seen Arapa Stahl clothing
(30:59):
in probably 10 years five, five, 10 years and when I went down
there everybody was wearing it.
So there's that secondarymarket where all the clothing
like just pallets of clothinggets end up kind of sold as new
there.
They also were really into limpbiscuit and some of those old
(31:20):
music bands.
So but back to this staying thecourse and being able to take
your brand and mature it ordefine it or even sometimes make
it more exclusive.
It's so tempting to say we'relosing out to our competitor,
(31:42):
let's try to be like them.
But you gave a couple ofexamples.
I don't know if you have anymore background on that.
But it just.
I love those stories wherebrands say we're hitting hard
times but let's say the course,let's find a way to define
ourselves and keep that originalvision, keep that original
(32:07):
personality of the brand andjust see where we can take it
with the new market, with thelatest changes in the economy.
Speaker 2 (32:19):
I think, if I made it into a general statement, for a
retailer to survive andultimately thrive, I think it's
all about differentiation anddistinction.
If it becomes about price, it'san immediately you're into this
(32:44):
race to the bottom conversation.
But some level of distinctionand differentiation is critical
to being able to establish somekind of moat to all of the
pretenders to the throne.
Another great example PoloRalph Lauren, where you could
(33:09):
take some of his current designsand if you told me they're from
2007 or 1980 or 1987, I'd haveto say, okay, that's possible.
But somehow Ralph Lauren, withtheir marketing and their store
(33:30):
presentation and just the waythey behave as a brand, they
somehow managed to keep it fresh.
And again, there's another brandwhere at one point you could
line up Ralph Lauren andNaughtica and Tommy Hilfiger,
and they were all these hugedepartment store brands that
(33:51):
were directed at the traditionalmarket or the oh God, what's
the word I'm missing.
But they were kind of threebirds of a feather, each with
their own point of view, butRalph Lauren is the one that has
survived and thrived.
Tommy's doing well.
(34:13):
I don't see much of Naughticathese days, but it's not.
As if preppy was the word I waslooking for, but it's not as if
preppy traditional menswear.
is this new thing?
But Ralph Lauren has kept itfresh.
(34:35):
It's really a great example ofa DNA that dates way back but is
just as meaningful today as itwas way back when.
Speaker 1 (34:49):
Those are the type of brands that when you see young,
just a new trend, a new fashiontrend, and people are throwing
back to these nostalgic stylesit's almost ironic.
You go, that's so funny,especially you've seen it
through the years so you can seesomeone young wearing it.
You're like they don't evenknow what that means.
(35:10):
But it's like an ironic fashionwhere someone might say this is
what people used to wear in theearly 90s.
I'm going to wear it becauseit's kind of ironic, it's
different and they're back tothat word differentiation, and
it takes on a new life becauseit's part of the language.
It's part of that language ofculture.
(35:34):
This is something that meantsomething to someone, and young
people might not even know whatit means, but they take on and
give it a new meaning and thatbrand survives.
Speaker 2 (35:46):
That's the beauty of that, is the challenge of brand
management, is the continualfreshening of the point of view,
and I think that's what back toour original original.
That's what department storesjust failed to do.
They failed to keep it freshover the years.
(36:08):
They got into this price driven, race to the bottom, and that's
a very, very difficult spot tonow extricate themselves from.
Speaker 1 (36:23):
I wonder how they'll stay in the midst of culture
when they've kind of placedthemselves in a, in a spot where
they're more of a stale low.
They don't, they don't feellike they're in the center of
culture.
I think there's a rise inshopping mall frequency, people
kind of looking for more of acommunal place place to walk
(36:47):
around.
There was one article we didabout Gen Z looking to shopping
malls as sort of a nostalgiathat they never had, especially
when a lot of them were in highschool.
The last few years during COVID, when things there wasn't much
for third spaces out of thehouse, any hints to the future
(37:09):
of the department store.
Are they looking to get intothe center of culture again and
what are you seeing?
Speaker 2 (37:16):
I, I, I don't know, that's probably above my pay
grade to try to answer a loftyquestion like that, but but what
I do think is that it's as muchabout the reinvention of the
mall as it is the reinvention ofthe department store.
Obviously that's a that has tobe a highly partnered venture.
But to your whole point aboutthe mall as town square, as as a
(37:42):
place to visit and beentertained, and you know the
whole experiential, you knowconversation, you know I, when
my kids were little the mall wasa fun place to visit.
As an adult, you know I, I hadtoo much.
It was too kind of a clue tooclose to me to to be fine
(38:05):
anymore.
But but I do think that the mallas, as as a town square kind of
environment, does have hugepotential.
Everything can't be on themagnitude of, you know, the mall
of America in in Minneapolis.
That's an amazing place.
(38:25):
But I, but I think there aresmaller versions of that that a
lot of malls really are going towant to convert themselves into
so that they are a headquartersfor that kind of social visit.
And it doesn't have to be.
You know, you don't have tohave a one day sale to to
(38:47):
populate the mall.
You don't have to have a primeday or some you know retail
discount event to populate themall.
You know movie theaters andrestaurants and you know the
whole town square phenomenon.
But a department store can't dothat by themselves.
(39:07):
That has to be very muchpartnered with the mall owners
of America and I'm sure thatprocess is underway.
But the mall owners probablywish they'd started this five to
10 years ago, but they didn't.
So here we are.
Speaker 1 (39:29):
That's a really good insight.
These seem like monolithicdepartment stores, but they
really are an anchor in a spacewhere they sit most of them, and
so that partnership.
They can't do it alone.
Even though they seem largeenough to make things happen,
they really can't do it alone.
Speaker 2 (39:51):
Well, I think it just demonstrates how different the
thinking has to be from 30 to 40years ago.
But that kind of retailblueprint just lived too long.
It didn't start its process ofevolution early enough.
Macy's building smaller,off-mall stores would have been
(40:17):
a brilliant, bold move 15 yearsago.
Today it's like why did we waitso long?
There need to be some brilliant, bold moves so that in another
10 years we're not stillslapping our foreheads going.
Why did we wait so long for?
Yeah?
Speaker 1 (40:39):
Well, perhaps the charts that you showed would
inspire some bold moves.
Sometimes, in the worst oftimes, those are when the bold
moves happen, when people arewilling to take risks.
Speaker 2 (40:50):
We shall see.
Speaker 1 (40:52):
Jeff, this has been a great conversation.
I absolutely enjoyed it.
Glad I could stump you with afew questions.
I learned so much from youevery time we chat and I hope
our listeners loved it too.
If anyone has any extraquestions, follow-ups,
definitely find our commentsection and check us out at
(41:15):
retailwarcom.
That's where the conversationhappens every day.
Subscribe to our podcast on anyof your favorite podcast
platforms.
You can even catch our dailynewsletter, retailwarcom slash
subscribe.
Thank you, jeff Swart, it'sbeen a pleasure.
Welcome to the Retail Wire podcast.
On today's episode we have aninterview with Jeff Sward.
We're going to learn a lotabout his expertise and we're
going to dive deep into a topicthat he wrote about on
RetailWirecom about TJ Maxx anddiscount store business models.
Looking forward to jumping in,Jeff, how are you doing?
Speaker 2 (00:34):
I'm doing great.
Good morning, Chase.
Speaker 1 (00:36):
So tell us a little bit about your role in your
background, just so thelisteners know what perspective
you're taking.
Speaker 2 (00:44):
Sure, I started in the department store business
with a division of FederatedDepartment Stores many years ago
, long before any of theconsolidations.
I spent about 14 years atBullocks in Los Angeles, went to
Macy's, saks, fifth Avenue,abercrombie, fitch and American
(01:05):
Eagle Outfitters, so I was verylucky to have both the
department store and specialtystore background in there and
then made the jump over towholesale with Oxford Industries
and I had roles in PolaroidFlooring Boys and Donna Karen
Girls, and then my last role atOxford was group president for
(01:27):
merchandising and design andthat was for our whole private
label and product developmentbusiness.
So I've had the good fortune tohave a number of different
exposures in the business.
Speaker 1 (01:39):
Well, that's a lot of experience to back up some of
your latest insights.
One of the things that we wantto talk about today is the
article you wrote, and it startsout by saying the demise of the
department store has beenhappening for longer than many
people realize, and youmentioned the internet and
(02:02):
e-commerce.
And then there was a graph thatyou saw that really helped you.
It says I didn't fully graspthe degree of this shift until I
saw the graph below.
Tell me more about that.
Were you researching at thetime?
How did you come across thisand what was the realization you
had?
Speaker 2 (02:24):
It was really just part of my daily scrolling
through different businessarticles and just kind of
general background reading, andI saw these two graphs and I
really found them quitemesmerizing in that, having
lived through this evolution andthis demise, if you will, of
(02:49):
department stores, I neverreally fully recognized the
degree that the role of thedepartment store had 20 and 30
years ago and has today, thedollar sales decline.
But what really caught myattention was going from almost
(03:12):
10% market share to these days2%.
That just took my breath.
I started to do a littlehomework and looked at then the
growth of TJ Maxx and Ross andsome of the other off-pricers.
It was just they didn't tradedollars dollar for dollar, but
(03:35):
as department stores were doingthis, the off-pricers were doing
this.
And what struck me was thatit's one thing to say, well, of
course the department stores andlots of retailers lost business
to the internet, but duringthat whole window the
(03:56):
off-pricers weren't driven bythe internet.
That was physical retail, foottraffic, getting your car go to
the store kind of business.
So literally the mall waslosing not just to the internet
but the mall was losing to thediscounters.
(04:18):
And then what really kind ofshook me was the understanding
and the realization which I'vehad for a while now, but this
kind of put an exclamation pointon it was that the way that
market works, in that thediscounters, the off-pricers,
(04:40):
literally live on the excessinventory of the mall retailers,
either at the factory level orat the store level, that the
department stores over the yearsand the mall retailers in
general have been continuouslyfeeding the growth of the
(05:04):
off-pricers season after seasonwith their ending inventories
that they wanted to liquidate.
They just serve it up to TJMaxx and TJ Maxx says thank you
very much and their businessgrows and thrives.
And I'm oversimplifying alittle bit here, but I think
(05:26):
that's the essence of the model.
And then I read an article fromjust a couple of weeks ago where
the CEO of TJXx was saying howhe's looking forward to the
abundant opportunities in themarketplace for further market
share growth, which means themall retailers are going to
(05:49):
continue to feed TJ Maxx all ofthis excess inventory.
And you know.
So I kind of asked myself thequestion what would it take for
TJ Maxx to have a tough year?
Because when everybody else ishaving a tough year, that just
means abundant inventory for TJMaxx and customers looking for a
(06:15):
bargain.
So that works okay for them In agood year.
There's still plenty of growthto go around.
So really, what would it taketo have for TJ Maxx to have a
difficult year?
And that's where the headlinecame from.
Is that, you know, does TJ Maxxreally have the most
(06:37):
bulletproof business model inretail today?
I kind of just marveled at thewhole scenario when I really
stepped back from it and lookedlike it like that.
So yeah, therein, you know, wasthe premise for the whole
article and I really had hopedit would percolate some very
(06:59):
energetic conversation and itdid.
Speaker 1 (07:03):
So there are different perspectives on this
too.
Some might say that thedepartment stores had it coming
due to their failure to adapt.
What's your response to that?
Speaker 2 (07:14):
Completely agree.
You know, again, I wasoversimplifying a little bit in
that I think department storeshave relied on a basic business
model and a basic physicalretail presentation that dates
back to the 80s and 70s and 60sof the prior century and they
(07:39):
literally have not evolved, youknow, in a manner that makes
them more current in their roleas an omnichannel player versus,
just, you know, basically, whenthey did not have the internet
as competition.
They have not evolved.
(08:01):
So it really one magnifies theother in that, you know, they're
losing this giant chunk ofbusiness to the convenience and
the breadth of offering on theinternet is one giant siphon.
And then the other siphon iswell, you know, whatever's
(08:25):
available in the departmentstores is available sooner or
later at TJ Maxx at a fractionof the price.
So as a customer, I just haveto be a little bit patient and
I'll visit TJ Maxx.
So the department stores,really, they got a double whammy
on that whole thing, andtherein lies their slide from
(08:45):
10% of market to 2%.
It's a tough, tough hit.
Speaker 1 (08:52):
You know there's that advantage of having a
consistent source of discountedsupply and who did most of the
brand equity building right?
It's not TJ Maxx who starteddoing advertising and helping
boost some of these brands, thebrands and the retailers at the
(09:15):
department store level.
We're pushing these brands inbuilding up that value.
Do you see a connection tothere?
It's almost like discountedphysical goods but also kind of
a very cost-efficient brandawareness for the brands that
they carry.
Speaker 2 (09:32):
Yeah, I think you put it quite quite nicely there.
Department stores spent decadesbuilding up the perception of
brands in the eyes of consumersfor either moderate or better
goods, and TJ Maxx really didn'thave to do any marketing other
(09:55):
than we're here for value, valueand low price.
So all of the brand equity, allof the perception, was invested
in and built by the brands andthe department stores and the
mall players.
And again TJ Maxx said thankyou very much for building all
(10:18):
that great brand equity andeverything.
We will now happily offer allthat product at a deeply
discounted price.
And you know, in the beginningI think it played beautifully
because in the beginning,meaning 20 and 30 years ago,
brands and retailers toldthemselves that the TJ Maxx was
(10:41):
invisible, that there were sofew outlets selling the stores
that it really wasn't an issuethen, and it happened to be a
really efficient way of gettingrid of excess inventory and, by
the way, in the beginning, nothaving a constant presence of
(11:03):
sale on the floor.
At some point you remove it, itgoes away to TJ Maxx and the
department store floors then canbe maximized for regular price
selling.
Well, that's not the marketthese days.
It seems like everything is onsale all the time anyway, and
(11:26):
it's just that.
Well, so is TJ Maxx, but atprobably lower prices.
So, yes, tj Maxx was able totake advantage of all of that
brand equity that everybody elsebuilt for them, that they could
simply just then, you know,offer the product in their
(11:47):
stores with, by the way, nothaving to invest in elegant
fixed ring or elegant shops orany of the other you know better
levels of presentation.
They put it all on racks andthe customer is happy to say
thank you.
Well, I'll go on my treasurehunt now.
(12:08):
So, yeah, that treasure huntmentality was just a beautiful
thing to watch evolve.
Speaker 1 (12:17):
Well, I can't help but connect the dots there with
today's forms of user generatedcontent or kind of lower quality
advertising that looks moreauthentic.
The pattern I'm seeing ispeople associate more authentic
brands and sometimes a betterdeal, better prices, when
(12:40):
there's not a high glossyadvertisement or a very
expensive looking commercialright.
And it works well for certainbrands that want to play the
value price angle.
It probably doesn't work thatwell for selling a BMW.
Speaker 2 (13:00):
Yeah, I can't really speak with authority on that.
I look at a lot of usergenerated content and I find it
amusing and entertaining, but Idon't necessarily view it as
brand building in the way that Iused to.
(13:21):
To me, let's face it, I'm aboomer.
I grew up in literally thestock rooms and the selling
floors of retail in a veryhands-on manner.
So to me, brand building a hugepart of a brand loyalty for me
(13:46):
is experiencing the product inperson in my hands.
Again, I'm used and entertainedby everything I see online, but
to me it's not really realuntil I experience the product
in person.
So it's additive to the wholething, but I can't say that I
(14:13):
relate to it like somebody let'sface it several decades younger
than I would be.
Speaker 1 (14:19):
Yeah, but in a TJ Maxx, the way the displays are
set up, it's really nothing toofancy and it gives you that
feeling of I think I'm gonnafind something.
Like you said the word treasurehunt, I think I'm gonna find
something that's unique.
Even if it's not, it just feelslike you're gonna discover
(14:41):
something new because it's notset up in a visual way that
amazes might set up.
Speaker 2 (14:49):
Right, I, you know, look, I still go to TJ Maxx
every now and then because ithappens to be down the strip
mall from my grocery store and Ifigure, from both a personal
and a professional point of view, I'm just gonna go spend 10 to
15 minutes and see what's there,and sometimes I buy something
(15:13):
and sometimes I don't.
But it is the curiosity aboutsaying to myself I wonder if
I'll find something today.
And you know, I don't have thatsame level of curiosity about
the mall or about departmentstores.
(15:33):
I do about a couple ofparticular retailers.
But in general I don't havehigh expectations when I go to
the mall.
And it's not even that I have ahigh expectation when I go to
the TJ Maxx.
But if I find something it'sbecause it really is.
(15:55):
I guess it goes to the treasurehunt mentality.
I really wasn't expecting tofind anything but oh my gosh.
You know, look at this gem I'vefound and look at the great
value it's.
You know the whole treasurehunt thing is a tough phenomenon
(16:16):
to describe, but I think it isa huge part of what makes TJ
Maxx tick and all the otheroff-pricers.
Speaker 1 (16:26):
It sounded like this advantage was just handed to the
discount or the off-priceretailers.
Do you think that thedepartment stores selling to
them knew that they were givingthem this advantage?
You said that they saw them asinvisible, not really a threat,
but do you think many in thosepositions were thinking this was
(16:50):
a threat that we should beaware of?
Speaker 2 (16:54):
I think it's classic frog and boiling water scenario
in that in the beginning, again,it was a relief just to be able
to get rid of the inventory andthe sheer number of off-price
outlets wasn't a threat.
(17:14):
And then over the years thewater kept getting hotter and
hotter and hotter.
And then one day everybodywakes up and says oh, the
water's boiling.
Wait a minute, I'm in trouble.
And I think you know, forinstance, when Macy's, within
their own four walls, did thoselast call departments where they
(17:38):
segregated all of their salegoods and put them into one big
room.
And then there's the other endof season offering that they've
got this name escapes me for themoment, but Macy's literally
tried to create the TGMXoff-price phenomenon within
(18:01):
their own four walls.
So you know, in a way I thinkthat was both brilliant and its
own problem, in that it's nowall of a sudden that much easier
for the customer to walk rightby all the regular place stuff
(18:21):
and back into the sale room.
But at least they're walkinginto the Macy's sale room and
not TGMX.
So it's a damn if.
I do damn if I don't scenario.
Speaker 1 (18:37):
Do you see any of the customers transitioning from
being a full-price buyer to anoff-price buyer?
I mean, a lot of times peoplewould say these are two
completely different segments sothey might walk past the full
price to that sale stuff.
But are you seeing any patternswhere people who normally would
(19:02):
buy the full price they'regoing well, why would I buy full
price when I can get the samething kind of in the clearance?
Speaker 2 (19:11):
That's a little bit difficult to answer because you
know, I guess I view a store atthe Nordstrom level as to still
be a department store thatoperates on selling product at
regular ticketed prices.
When the customer walks intoNordstrom, they expect, or at
(19:31):
least they're willing to pay,full price, because that's the
game at Nordstrom.
When they walk into Macy's theyare immediately greeted by sale
signs or discount signs of somenature on an overwhelming
number of the fixtures.
(19:52):
So immediately the internalcompetition just between this
fixture and that fixture inMacy's is immediate competition
between regular price productand sale product.
Or when I get the email fromany given retailer that says
(20:14):
wait a minute, why did?
Speaker 1 (20:18):
they have to earn your business when you were
about to shop.
Speaker 2 (20:21):
You're not even gonna try to sell it at regular price
.
It's new and it's instantly onsale.
And that is the kind of theretailer malady these days, that
if they don't offer some levelof promotion or discount or Bogo
(20:42):
or something, then either thenext store does or the next
fixture in their own store does,and I don't know how they
extract themselves from thatscenario.
Speaker 1 (20:58):
Well, the psychology of a consumer and we're all
consumers.
And so when I see a discount onsomething when it just came out
, I'm thinking, well, why didthey artificially put that?
Why did they put it so high?
You know, if it really isvalued here and if I'm trying to
(21:23):
sell something, yeah, the firstattempt really should be convey
the value and have someone buyit for the value that you've
placed on it.
It's a little bitcounterintuitive.
It kind of makes it look likeit didn't sell for that or it
shouldn't have ever been pricedthat high.
Speaker 2 (21:46):
Well, right, and I think that's the corner that so
many retailers have paintedthemselves into that the
prevalence of sales anddiscounts and promotions is so
ubiquitous that if you as aretailer aren't offering some
(22:09):
level of your own sale ordiscount, then the customer is
just gonna walk 10 feet then tothe next store.
So you know, I think there aresolutions, but I think that it
means that stores would probablyhave to shrink in sales as they
(22:30):
forgo promotionally drivenbusiness.
But it might mean that theycould do more business at higher
margins.
Might be less business overall,but it would be a healthier,
more profitable business.
That would be better in thelong run.
I guess I'm thinking about theMacy's move from full line huge
(22:56):
department store mall baseddepartment stores to smaller
footprint strip mall locations,which I think is absolutely the
right move.
But if all they do is take thesame merchandising and sale
(23:16):
driven posture in the smallstores as they do in the big
stores, then that's just kind ofa real estate strategy.
It's not a reinvention of thebusiness strategy.
So again, I think there aresolutions, but I think
(23:38):
ultimately those kinds ofsolutions are gonna be scarcity
driven.
So that you know, there's awhole what I call limited
edition kind of thinking whereas a retailer I'm gonna say,
look, I'm only gonna offer somany of these items and they're
this price and when they're gone, they're gone Now.
(23:58):
So that in itself limits thesales upside but it does protect
the image of the brand.
I think in saying that, youknow, I'm gonna make myself
distinction, make myselfdistinctive, simply by saying
(24:20):
I'm gonna offer, you know, moredistinctive product on a limited
edition point of view than justhaving rack after rack after
rack of goods with a sales signon top of each one.
So I think that you know, thepursuit of growth has, you know,
in this whole subject ofoverconsumption and that whole
(24:42):
thing has really been acomplicating factor for retail
Felt good while we were doing it, but it kind of put us in a
tough spot.
Speaker 1 (24:53):
Is there a pattern as department stores grew and
malls kind of grew?
It's like you become a largemarketplace and there's this
assumption that you have toserve every kind of customer so
you no longer have.
When you talked about, I'mthinking of Dillard's because we
have a Dillard's nearby, butyou said Nordstrom.
(25:14):
There's an assumption that youwalk into a Nordstrom and you
are looking to pay more of aregular price, not so much of
the sale driven and because theyhave a large footprint.
Is there more of an assumptionthat they're more of a
(25:35):
marketplace for everyone andthey have to have options for
everyone?
Would a smaller footprint storeplay better into full price,
just like a luxury boutiquewould?
Speaker 2 (25:48):
I think there's probably a role for both large
and small footprints.
I think that's more market sizeand demographic driven.
I think what you're talkingabout is more of a how does a
retailer want to define theirbrand promise?
(26:09):
What kind of boundaries do theywanna give themselves?
And I think a lot of retailersover time kept thinking that
they should stretch theirboundaries both up and down.
Speaker 1 (26:25):
Yeah.
Speaker 2 (26:30):
I understand the temptation to do both, but I
think that what has happened isthat people say that the market
has just flat out bifurcated.
Anyway it's either Nordstrom orWalmart and the whole middle
(26:51):
has just collapsed.
And, speaking as really as acustomer of what would still be
the middle market, I mean asmuch as I like to shop in
Nordstrom every now and then.
I would really much rather shopat a Macy's or a Dillard's or a
(27:11):
, but the attitude is almostwell, I just might as well go to
TJ Maxx because what's offeredat Macy's isn't special enough
and I don't have the sameappetite for Nordstrom or the
(27:33):
product as I used to.
So the definition that aretailer wants to create for
their brand promise I think mostretailers need to revisit that.
I think a retailer that has donewell two retailers that have
done an outstanding job at it isAmerican Eagle Outfitters, who
(27:58):
have a focused customer thatthey talk to and I think they
talk to them brilliantly andconsistently, and it happens to
be a retailer that hascontinually very little end of
season inventory.
And American Eagle Outfittershas stayed pretty consistent
(28:20):
with what they've been all aboutfor at least 25 years, and I
worked for them for a littlewhile, so I have some feeling
for what the DNA is there.
The other retailer that I thinkhas done a really good job is
Abercrombie and Fitch.
Again, I worked for them for alittle while, a long time ago.
(28:44):
But if you watch howAbercrombie has redefined their
brand promise and redefined theattitude and the aesthetic that
they use to talk to thatconsumer, I think it's been a
brilliant kind of reinvention,of a refocusing not up or down,
(29:08):
but just kind of a refocusingand a reinvention of an attitude
and an aesthetic where they'vegot distinction.
They can no longer be confusedwith American Eagle Outfitters
For a while there, if you linedup Abercrombie and American
Eagle and Arapa Stahl and Pax.
(29:33):
Sun.
They were all on one continuumof genes and hoodies.
Speaker 1 (29:39):
I remember that.
Right 2005 to 2010.
Speaker 2 (29:45):
Exactly, exactly, and that worked okay for a while,
but for a lot of reasons,abercrombie had to reinvent
themselves and now look at theresults they're getting.
They're now getting terrificresults again as a result of
redefining their boundaries andtheir attitude and their
(30:08):
aesthetic.
So, but, man, they went throughsome tough times to do it, but
I give them huge credit for whatthey've accomplished.
Speaker 1 (30:18):
Well, you make a I love this topic because everyone
goes through tough times but itdepends on what you do with
that and if you kind of have aminor freak out and change your
brand and go this way or go thatway, or if you stay the course.
I don't know where Arapa Stahlwent.
(30:38):
I think they went discount Like.
I always remember them as likethe cheaper alternative to
Abercrombie and American Eagle,and I don't know where they went
.
But I know when I traveled inLatin America I went to South
America and Central America Ihadn't seen Arapa Stahl clothing
(30:59):
in probably 10 years five, five, 10 years and when I went down
there everybody was wearing it.
So there's that secondarymarket where all the clothing
like just pallets of clothinggets end up kind of sold as new
there.
They also were really into limpbiscuit and some of those old
(31:20):
music bands.
So but back to this staying thecourse and being able to take
your brand and mature it ordefine it or even sometimes make
it more exclusive.
It's so tempting to say we'relosing out to our competitor,
(31:42):
let's try to be like them.
But you gave a couple ofexamples.
I don't know if you have anymore background on that.
But it just.
I love those stories wherebrands say we're hitting hard
times but let's say the course,let's find a way to define
ourselves and keep that originalvision, keep that original
(32:07):
personality of the brand andjust see where we can take it
with the new market, with thelatest changes in the economy.
Speaker 2 (32:19):
I think, if I made it into a general statement, for a
retailer to survive andultimately thrive, I think it's
all about differentiation anddistinction.
If it becomes about price, it'san immediately you're into this
(32:44):
race to the bottom conversation.
But some level of distinctionand differentiation is critical
to being able to establish somekind of moat to all of the
pretenders to the throne.
Another great example PoloRalph Lauren, where you could
(33:09):
take some of his current designsand if you told me they're from
2007 or 1980 or 1987, I'd haveto say, okay, that's possible.
But somehow Ralph Lauren, withtheir marketing and their store
(33:30):
presentation and just the waythey behave as a brand, they
somehow managed to keep it fresh.
And again, there's another brandwhere at one point you could
line up Ralph Lauren andNaughtica and Tommy Hilfiger,
and they were all these hugedepartment store brands that
(33:51):
were directed at the traditionalmarket or the oh God, what's
the word I'm missing.
But they were kind of threebirds of a feather, each with
their own point of view, butRalph Lauren is the one that has
survived and thrived.
Tommy's doing well.
(34:13):
I don't see much of Naughticathese days, but it's not.
As if preppy was the word I waslooking for, but it's not as if
preppy traditional menswear.
is this new thing?
But Ralph Lauren has kept itfresh.
(34:35):
It's really a great example ofa DNA that dates way back but is
just as meaningful today as itwas way back when.
Speaker 1 (34:49):
Those are the type of brands that when you see young,
just a new trend, a new fashiontrend, and people are throwing
back to these nostalgic stylesit's almost ironic.
You go, that's so funny,especially you've seen it
through the years so you can seesomeone young wearing it.
You're like they don't evenknow what that means.
(35:10):
But it's like an ironic fashionwhere someone might say this is
what people used to wear in theearly 90s.
I'm going to wear it becauseit's kind of ironic, it's
different and they're back tothat word differentiation, and
it takes on a new life becauseit's part of the language.
It's part of that language ofculture.
(35:34):
This is something that meantsomething to someone, and young
people might not even know whatit means, but they take on and
give it a new meaning and thatbrand survives.
Speaker 2 (35:46):
That's the beauty of that, is the challenge of brand
management, is the continualfreshening of the point of view,
and I think that's what back toour original original.
That's what department storesjust failed to do.
They failed to keep it freshover the years.
(36:08):
They got into this price driven, race to the bottom, and that's
a very, very difficult spot tonow extricate themselves from.
Speaker 1 (36:23):
I wonder how they'll stay in the midst of culture
when they've kind of placedthemselves in a, in a spot where
they're more of a stale low.
They don't, they don't feellike they're in the center of
culture.
I think there's a rise inshopping mall frequency, people
kind of looking for more of acommunal place place to walk
(36:47):
around.
There was one article we didabout Gen Z looking to shopping
malls as sort of a nostalgiathat they never had, especially
when a lot of them were in highschool.
The last few years during COVID, when things there wasn't much
for third spaces out of thehouse, any hints to the future
(37:09):
of the department store.
Are they looking to get intothe center of culture again and
what are you seeing?
Speaker 2 (37:16):
I, I, I don't know, that's probably above my pay
grade to try to answer a loftyquestion like that, but but what
I do think is that it's as muchabout the reinvention of the
mall as it is the reinvention ofthe department store.
Obviously that's a that has tobe a highly partnered venture.
But to your whole point aboutthe mall as town square, as as a
(37:42):
place to visit and beentertained, and you know the
whole experiential, you knowconversation, you know I, when
my kids were little the mall wasa fun place to visit.
As an adult, you know I, I hadtoo much.
It was too kind of a clue tooclose to me to to be fine
(38:05):
anymore.
But but I do think that the mallas, as as a town square kind of
environment, does have hugepotential.
Everything can't be on themagnitude of, you know, the mall
of America in in Minneapolis.
That's an amazing place.
(38:25):
But I, but I think there aresmaller versions of that that a
lot of malls really are going towant to convert themselves into
so that they are a headquartersfor that kind of social visit.
And it doesn't have to be.
You know, you don't have tohave a one day sale to to
(38:47):
populate the mall.
You don't have to have a primeday or some you know retail
discount event to populate themall.
You know movie theaters andrestaurants and you know the
whole town square phenomenon.
But a department store can't dothat by themselves.
(39:07):
That has to be very muchpartnered with the mall owners
of America and I'm sure thatprocess is underway.
But the mall owners probablywish they'd started this five to
10 years ago, but they didn't.
So here we are.
Speaker 1 (39:29):
That's a really good insight.
These seem like monolithicdepartment stores, but they
really are an anchor in a spacewhere they sit most of them, and
so that partnership.
They can't do it alone.
Even though they seem largeenough to make things happen,
they really can't do it alone.
Speaker 2 (39:51):
Well, I think it just demonstrates how different the
thinking has to be from 30 to 40years ago.
But that kind of retailblueprint just lived too long.
It didn't start its process ofevolution early enough.
Macy's building smaller,off-mall stores would have been
(40:17):
a brilliant, bold move 15 yearsago.
Today it's like why did we waitso long?
There need to be some brilliant, bold moves so that in another
10 years we're not stillslapping our foreheads going.
Why did we wait so long for?
Yeah?
Speaker 1 (40:39):
Well, perhaps the charts that you showed would
inspire some bold moves.
Sometimes, in the worst oftimes, those are when the bold
moves happen, when people arewilling to take risks.
Speaker 2 (40:50):
We shall see.
Speaker 1 (40:52):
Jeff, this has been a great conversation.
I absolutely enjoyed it.
Glad I could stump you with afew questions.
I learned so much from youevery time we chat and I hope
our listeners loved it too.
If anyone has any extraquestions, follow-ups,
definitely find our commentsection and check us out at
(41:15):
retailwarcom.
That's where the conversationhappens every day.
Subscribe to our podcast on anyof your favorite podcast
platforms.
You can even catch our dailynewsletter, retailwarcom slash
subscribe.
Thank you, jeff Swart, it'sbeen a pleasure.
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