Back to Blog

Surviving and Thriving Through the “Retail Apocalypse”

Last updated: February 21, 2020

closed retail stores

Today’s retail industry seems to exist in a state of either feast or famine. Almost every publication seems to be publishing shocking headlines – like reporting that 9,300 retail stores were set to close in 2019, or side-eyeing Amazon when the last Sears shuttered its doors. However, according to industry experts, these headlines aren’t telling the full story. In particular, one group of analysts found that for every company that closes a store, about five retailers are opening new stores.

This makes it clear that the “retail apocalypse” is a bit of a misnomer – you’d be hard pressed to find a doomsday scenario with an outlook this positive. Instead, it seems to be more like a plague that targets the weakest retailers. Even inside of the same shopping center, there are retailers that are thriving, while their neighbor is floundering.

Traditional retailers seem to be falling into some pitfalls, while others are making the most of this new retail environment. Let’s take a look at the differences between businesses that are enjoying unprecedented success, and those who are fearing the end.

A Lesson in Change From Forever 21

In 2019, Forever 21 filed for Chapter 11 bankruptcy, and was forced to close over 100 stores across the US, and reevaluate their international presence. This was quite the fall from grace, since they had 500 US stores in 2010, and their owners were two of the richest individuals in the United States. This has left a lot of pundits wondering – what happened here?

Several thought leadership articles blamed it on Forever 21’s lack of an online presence. Maybe that played a small part, but keep in mind Forever 21 opened their online store in 2003 – if anything, they were early adopters. Instead, it’s far more likely that Forever 21’s business model couldn’t compete with changing consumer preferences in an increasingly competitive market.

Forever 21 tried a lot of different ways to stay relevant with consumers - but, they unfortunately missed the mark. Many blogs slammed their strange methods of staying afloat, pontificating why they would ever make a Cheetos or USPS-based clothing line. The concept of selling USPS tube tops might be confusing for individuals outside of Forever 21’s desired target audience, but the true intention of this offering was to help reposition them as a streetwear brand. However, streetwear enthusiasts are still staying away from Forever 21, likely due to Forever 21 not completely understanding these consumers.

Modern streetwear is a reflection of the values held by Gen Z and other young people. Gen Z is more concerned with sustainability and individuality than any age group before them, and their fashion choices reflect this. For example, young streetwear enthusiasts can be found browsing consignment shops for unique pieces that are central to their outfit, while they only visit a mall for their most basic apparel. This means that a USPS shirt, no matter how cool it is, doesn’t truly have a place in their wardrobe.

In short, Forever 21 missed the boat when it came to fully and holistically understanding a changing target market. To turn this around, Forever 21 must work on leveraging consumer data to understand generational preferences.

How Ulta Uses Marketing Technology to Surge Forward

If you’re looking for someone thriving in the “retail apocalypse,” look no further than Ulta Beauty. Between 2009 and 2016 their stock grew over 3,000 percent. They’ve experienced double-digit growth in revenue for nearly a decade, with a 14 percent increase between 2018 to 2019. The crux of this success is Ulta’s novel approach of selling beauty.

At its core, Ulta is the ultimate customer-centric business. They don’t make assumptions about what Millennials and Gen Z would seek  from make-up brands, they dive into consumer data to understand exactly what they want. Ulta has a high-value loyalty program with over 31 million subscribers – and the data within is implemented into a CRM to produce granular data about how customers interact with the brand.

With the insights they collected, they found that consumers believe beauty is about having fun, expressing yourself, and having an escape from daily life. This forms the foundation of their personalized advertisements. Once they understand how their consumers are inherently motivated, they create subcategories based on certain demographic insights. This helps them hone in on the needs and preferences of all their customers, and only promote beauty products that fully meet their needs.

Leveraging Marketing Attribution for Enhanced Personalization

Ulta has a seemingly bottomless source of customer data. This begs the question – how do they get such granular data?

The answer is that Ulta uses advanced attribution to break down engagements and touchpoints that impact their business the most. According to a recent interview with CMO David C. Kimbell, “Everything – whether it’s a TV spot, or a highly targeted email, or anything in between – plays an important role at every turn of the consumer purchase journey.” During the interview, he continues to explain how they continuously optimize and elevate every touchpoint with the intention of reaching customers at the precise moment that they’re ready to buy.

What he’s describing are micro-moments – and while many don’t realize it, most beauty-related searches are fundamentally informative, and thereby ideal for micro-moment marketing. When a customer searches online for “does Urban Decay test on animals,” they’re showing a strong purchase intent – given that Urban Decay doesn’t engage in animal testing. If a customer searched for this, their loyalty program would almost certainly offer them a discount on their next Urban Decay purchase.

However, without proper marketing attribution, it’s impossible to truly determine which marketing messages resonate with consumers. Retailers must track every online touchpoint that consumers engage with, and understand how it all cumulates into not only sales, but increased loyalty and a better brand value.

Final Thoughts

The idea that retail is floundering is a common misconception. While certain brands seem to be experiencing a reckoning, others are riding the tidal wave of change into a brighter future. This “retail apocalypse” has very little to do with outside forces like Amazon, or eCommerce. In general, the true cause of this disruption is that some retailers have lost the pulse on their target consumer, while others have designed data-driven marketing strategies that tap into consumer needs.

To hone in on the most important customers, retailers must rethink the way that they target their messaging. Instead of relying on gut feelings, they need to collect high quality customer data, and analyze that data using advanced marketing technology. Only then will retailers begin to thrive during this uncertain time.

Written by Marketing Evolution