Amidst announced store closings by GAP and news of faltering sales for once untouchable middle market retailers Abercrombie & Fitch and J Crew, one of the hot topics of the moment is the questionable future of the middle market. But is it really the end for the middle market? Or simply time for a reset?
Off-and-on for well over fifteen years, there have been many, both within and outside the retail industry, that have predicted the death of the middle market. Sure, the middle market has been and remains a tough market. With savvy middle-class consumers simultaneously trading-down on commodities and fast fashion, and trading-up for luxury and designer labels, the true middle market dollar has been spread across the full spectrum of retail. Yet, while some middle market retailers have consistently struggled, eventually shuttering their stores, others have emerged to fill the gaps. Even Abercrombie & Fitch and J Crew, not to mention the likes of Lululemon and Aritzia, have only emerged as retail front-runners in the past decade.
While the past year has brought the demise of Smart Set, Jones of New York, Mexx, Jacob and Parasuco, and the wavering of once golden retailers, the sky does not need to fall for middle market retailers. With an ever-changing market and ever-increasing demands of consumers, retailers cannot rest on their laurels; they need to be constantly looking for ways to evolve and up their game. It’s not complicated – it’s just good retailing.
What middle market retailers need to do:
1. Have a Point of View
Middle market retailers can’t be everything to everyone. There is no safe middle ground. In such a crowded and competitive marketplace, retailers must stand for something. They just carefully target a niche sector with a lifestyle offering and a compelling story. Look at what Lululemon has accomplished by staying mainly true to its yoga roots and cautiously expanding into other activewear – all while maintaining the brand essence. And how Anthropologie has created a lifestyle around a unique artisan aesthetic which is re-translated and reinterpreted in every store and with every season.
2. Relevance, Relevance, Relevance
Success in retail, regardless of sector, is contingent upon providing a relevant offering and experience to customers. Middle market retailers need to work hard at anticipating customers’ needs and desires, delivering what customers want right now, or what they didn’t know they wanted – and all at a good value. This is where once successful retailers have faltered. Abercrombie & Fitch has failed to evolve to meet a changing customer attitude and GAP got lost in a sea of sameness that disengaged customers, while J Crew has made some missteps in anticipating customers’ desires.
3. Differentiate
Middle market retailers can’t survive selling ho-hum product or generic basics that can be purchased through lower priced fast fashion retailers. They must provide customers with a product offering and experience unique to them and unlike any other. Customers don’t want a sea of sameness; they want choices and means of expressing themselves through the product they purchase and the brands that they align themselves with.
In principle, there is much that middle market retailers can learn from fast fashion retailers such as H&M who partnering with high-profile designers such as Karl Lagerfeld and Alexander Wang, have mastered the art of limited-run capsule collections. Although this tactic may have become all too common, the strategy of injecting a fresh perspective is always on target. Middle market retailer Banana Republic is betting that new creative blood will make a difference for them. After losing its lustre in the past few years, they brought in former J Crew designer Marissa Webb as their new creative director late last year, to breathe new life into the brand and make them a viable option to higher priced designer labels.
4. Innovate
Never rest! The market is constantly changing and customers continually evolve. And customers only remain loyal as long as the relationship remains valuable to them.
Middle market retailers must always be looking for new fashion directions, new technologies and new customer desires that can be tapped. Whether it’s latching onto the current “athleisure” trend, promoting responsible and ethical manufacturing practices, developing new technology, or reinventing a retail business model, middle market retailers can be leaders.
Look at the success of Kit and Ace, the fledgling retailer from the same family that brought Lululemon to market. They are making a name for themselves with comfortable functional “athleisure” fashions fabricated in Technical Cashmere. Meanwhile fast fashion retailer Uniqlo, who prides itself on being a technology company rather than a fashion company, developed HeatTech, a heat-retaining fabric that they have integrated into underwear, T-shirts and socks.
