While malls can replace traffic by filling empty stores with food halls or entertainment options, that's not going to help struggling clothing retailers, including Macy's (NYSE:M) and J.C. Penney (NYSE:JCP).
About 25% of clothing sales in the United States have moved online, according to a new survey from UBS. That number should grow to 31% by 2023, according to a CNBC story on the UBS data. That might even be a cautious take on online apparel sales expansion, as new technology like digital tailors and augmented reality (AR) may drive the numbers even higher.
"Shoppers say they increasingly go to the mall to eat at the food court or just hangout instead of visiting a big box store," UBS analyst Jay Sole told CNBC. "Since the mall is no longer the place consumers discover fashion, it makes sense the reasons they visit the mall are changing."
Malls are changing
The availability of online shopping has led consumers to visit regional and outlet malls less often for six straight years, according to Sole. That's sort of a confusing statistic, because consumers may visit less often to buy clothes but go more times to eat at expanded food halls or to visit entertainment options.
For retailers including Macy's and J.C. Penney, the problem is that mall visits by people looking to eat or see a movie do not translate into clothes shopping. The challenge -- and it's a big one -- is that department stores need to give shoppers a reason to come into their stores.
It may be too late for J.C. Penney to make that happen. CEO Jill Soltau has introduced a new experience-driven store model, but her company's financial situation makes it unlikely that she will be able to deploy the concept widely before running out of money. Her remarks on the new concept, however, may lay out a blueprint for what Macy's should do:
They [J.C. Penney customers] told us that they want a retailer that reflects their lives, makes them feel good about themselves, is fun to shop and truly understands the important moments in their lives, big and small. We bring that complete experience to life at our brand-defining store. This store is more than a renovated location, it is the fullest articulation of our customer-centered strategy, an investment in our future and a lab to inform decisions to return JCPenney to sustainable, profitable growth.
It's probably too little, too late for J.C. Penney, but Macy's remains profitable (albeit not by much) and has the cash needed to make major changes. That should start by focusing on giving consumers reasons to visit its stores when they come to the mall for a different reason.
Is there hope for fashion retailers?
Shopping for clothes online is easy, but it has its downsides. Technology has not yet replaced the experience of handling an item and trying it on. That's an advantage brick-and-mortar chains can leverage, but that's not enough on its own.
Macy's, and maybe J.C. Penney, have to bring value to the apparel shopping experience that exceeds what someone can get online. That may mean helping people create a look, tailoring services, and/or offering experiences that can't be duplicated online.
Brick-and-mortar chains also have to offer an optimized omnichannel experience. Consumers may stop into a store for one-on-one service, a special event, or to try something on. Once they do that, it should be easy for them to buy items they tried on, or have even purchased before, online. Returns should also be optimized for shoppers who want to use a store and return items via mail.
Retailers including J.C. Penney and Macy's have to think of their stores as more than places to house merchandise. A consumer visiting a mall to eat dinner may stop by afterwards for a fashion show or a chance to get a custom fitting. That same consumer probably won't come in just because they need some socks or a new shirt, because either of those can be ordered during dinner.