At the start of the year, Retail Dive laid out the biggest trends expected to disrupt and define 2017. Above all else, we anticipated mass store closures, consolidations and mall mutations. Now that the year is coming to a close, that prediction has come to life in a dramatic way — with the rate of retail bankruptcies and the number of distressed retailers eclipsing those during the Great Recession and an increased appetite for acquisitions.
Make no mistake, it has been a year of transition for all retailers — from online to brick-and-mortar and everyone in between – and it hasn’t been easy. But those that stood out for the better, did so by investing in themselves — in products, stores, experiences, technology and delivery. Others, however, made headlines this year for outdated business strategies that left some stagnate and others in bankruptcy court.
Here are the retail industry’s biggest winners and losers in 2017.
Winner: E-commerce startups
Pure play is dead, but digitally native companies are finding new ways to thrive.
Be it flagship stores, pop-ups or partnerships with retailers, these young companies are expanding into the realm of brick-and-mortar retail — and they’re making names for themselves.
Notably, Bonobos, known for its guideshop presence, and Modcloth, a quirky apparel retailer with a healthy social media following, were both brought under Walmart’s e-commerce wing. While the culture may have changed at the businesses, the increased resources are a major win.
“Showroom stores, like Bonobos or b8ta, are potentially showing us the future of physical retail,” Peterson said. “If I can have reduced square footage, reduced labor, a better experience, a pick-up/delivery station and still keep my billboard up at key consumer touch points, I’m now competing with online retailers where they can’t: the consumers senses.”
Startup delivery companies also got a boost. Three-year-old Shipt was acquired by Target for $550 million to grow delivery ambitions.
Other brands have used partnerships with major retailers to find growth. Mattress startup Casper, for example, partnered with Target earlier this year in a move that rolled out products to over 1,200 stores.
Loser: Women’s specialty apparel
record year for bankruptcies, especially for specialty apparel retailers. The list has now grown to include Wet Seal, BCBG Max Azria, Vanity, Rue 21, Papaya Clothing, True Religion, Alfred Angelo and Styles for Less, not to mention smaller niche businesses.
For Peterson, The Limited’s bankruptcy stood out as the single most disappointing moment of the year. “That was the premiere women’s specialty brand only a few years back,” he said. “For that brand to be totally lost in such a short period of time is a statement about who sold it and who bought it earlier this century.”
For many of these retailers, their demise rests in an inability to differentiate.
“The core advantage of specialty or category specific retailers is the ability to deliver category thought leadership to a specific audience,” Matt Sargent, senior vice president of retail for Frank N. Magid Associates, told Retail Dive. “In trying to be everything to everyone, many of these specialty retailers, who lack the size to compete with the likes of Amazon and Walmart, have found themselves caught in the middle between specialty retailers who understand their strengths (REI) and the giants.”
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