Retail chains continue to experiment with different business models as they deal with ongoing challenges. Some recent ventures illustrate the variety of strategies being tested:
- Partnerships with etailers. Lord & Taylor is launching a presence on Walmart’s website starting in spring 2018, referring to the initiative as its online flagship store. The deal brings the high-end brand into a mass environment. Separately, Kohl’s is accepting returns from Amazon shoppers and giving Amazon 1,000 square feet of front-of-store floor space in 10 locations to promote the latter’s smart devices and in-home security services. Similarly, Sears will sell Amazon Echo smart devices and some other items, while Amazon will sell Kenmore products.
- Launch of new proprietary labels and product lines. Amazon has added to its range of proprietary brands, which already number close to 20, by launching the Goodsport, Rebel Canyon, and Peak Velocity sportwear labels and the Rivet and Stone & Beam furniture brands. Grocers Kroger and Lidl both are adding fashion lines, Kroger’s to launch next year and Lidl’s on the market already through a licensing deal with Heidi Klum.
- Addition of unexpected products and categories in-store. Best Buy increased its presence in the toy category this year, including non-tech items such as board games and dolls (licensed varieties among them), while JC Penney is selling both electronics (e.g., Sony PlayStation 4) and toys (Lego sets), two categories it got out of at least 10 years ago. Kroger’s and Lidl’s adventures in apparel are also examples of this trend.
- Enhancement of in-store assortments through licensing. Aeropostale and its new owner Authentic Brands Group signed IHL Group to produce a range of Aeropostale-branded intimate apparel to be sold in the chain’s stores, while Lululemon paired with Athletic Propulsion Labs for a line of shoes to be distributed in 23 of its locations. The deals give shoppers more options under the retailer’s brand umbrella.
- Introduction of proprietary brands into new retail environments. The Joester Loria Group is putting together an outbound licensing program for tween retailer Justice. Sears recently signed Permasteel for Kenmore grills and Cleva North America for a range of Kenmore vacuums, among other deals for its proprietary brands. Aeropostale has announced its intention to enter new retail channels through licensing, while Iviva by Lululemon signed a deal with PBTeen for a line of home goods.
- Use of pop-up shops. This year, defunct retailer Sharper Image is operating a pop-up in Times Square, while Toys R Us offered a pop-up at the same intersection in August, two years after closing its store there. Limited Too, which shuttered its bricks-and-mortar locations in 2008, returned via a mobile pop-up for the back-to-school season this year.
Although most of these business models would once have been unheard of and controversial, they have been growing in usage and acceptance over the past several years. The speed and frequency with which they are happening is also on the rise; all of the initiatives on this list were put into motion or announced this year, with the bulk occurring in the second half.
The accentuated emphasis on new strategies comes in the wake of the so-called “retail apocalypse” that peaked earlier this year with a daily string of news about bankruptcies, closures, and contractions involving retail chains of all types. In fact, many of the retailers mentioned on this list are struggling or have ended their existence as bricks-and-mortar chains.
Not all retailers are suffering equally, of course, and some have seen positive results of late. But all are open to trying new things in order to survive, strengthen, and/or reposition as consumers’ shopping habits continue to undergo fundamental change.
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