Column: The Future of Retail May Be in the Past

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    Roberta the Robot demonstrates an electric carving knife to Christmas shoppers in the Macy's department store basement in New York, Nov. 17, 1966. Woman at right watches with critical eyes but the two little girls appear to be in a state of wonderment. Roberta's actions are controlled by an operator at the other end of the "apron string" seen on the floor at the lower left. (AP Photo/Eddie Adams)

For Bloomberg View
Published: 1/28/2017 10:00:05 PM
Modified: 1/28/2017 10:00:05 PM

If you’d told me back in 1984 that in 2017 we’d be talking about the collapse of Macy’s in particular and department stores in general, I’d have been shocked.

I really didn’t expect them to last this long.

As a young reporter enjoying an income noticeably above minimum wage for the first time, I finally had enough money to indulge my love of clothes — not designer duds, but the mid-priced garments stocked by stores like Macy’s. But since I was working every day and traveling to visit my long-distance boyfriend (now husband) most weekends, I had little time to shop, especially in big stores.

Generalizing from my own experience, I concluded that with women entering the labor force in ever-increasing numbers, the days of leisurely housewives roaming department-store aisles were surely over. People would want to shop in small stores with focused inventories, where they could find what they wanted on a quick lunch break, or, like me, they’d order from catalogues.

Remember them?

While big-catalogue operations like Sears date to the 19th century, beginning in the 1970s mail-order became more varied and focused. By the early 1980s, you could sit at home in the evening and buy from specialty retailers selling everything from inexpensive silk blouses, a novelty at the time, to furniture you couldn’t find in a local store. Visa and MasterCard meant that mail-order merchants no longer had to run their own billing and collections departments.

“It was the advent of the credit card that really did it,” mail-order pioneer Roger Horchow told me in 2001, when I interviewed him for my book The Substance of Style. “You knew that you could buy something and if you didn’t like it, you had someone in between you and this anonymous company.” By 1982, the average American household was getting 40 catalogues a year, a number that skyrocketed over the next decade.

Already used to calling toll-free numbers and putting catalog (or shopping channel) orders on their credit cards, many consumers were primed for e-commerce. Online shopping is faster and easier to disguise as work, but the trends roiling retailing aren’t as new as people think. They’ve just accelerated.

It’s not just a matter of where we buy, but of what. Back in 1984, Americans on average devoted about 6 percent of their household spending to apparel, compared with just 3 percent in 2015. The trend for women’s apparel — the mainstay of department stores — is similar: a drop from 2 percent to 1 percent, according to the most recent data from the Bureau of Labor Statistics’ integrated Consumer Expenditure Survey.

So diagnoses that pronounce today’s fashions boring or the service at a particular retailer below par may be correct as far as they go, but they miss the bigger picture. If customers are spending less time, attention and income on your entire category, there’s simply less business to go around, even with no management missteps.

It’s become a moralistic cliche to observe that consumers are choosing experiences over stuff, as though it’s a sign of superior character rather than material satiation. But the phenomenon is unmistakably real. You can see it at mealtimes.

As a rookie reporter who loathed grocery shopping, I was a harbinger in this way as well. While the average household in 1984 allocated 15 percent of its spending to food at home and 6 percent to food away from home, I spent less money on buying meal ingredients and more on eating out. (A friend and I once went to the same pizza place for dinner and political prognosticating every night for a week.) By 2015, the average was 7 percent for home and 5 percent for away, reflecting lower real food costs as well as new habits.

Grocery shopping is buying stuff. Eating out is buying stuff along with a positive experience — while saving time on chores such as grocery shopping and doing dishes.

Contrary to what you might suppose, shopping-center vacancy rates have been steadily falling since 2008, thanks in large part to food. Restaurant expansions account for increasing amounts of space, and malls have begun turning to food halls as anchor tenants. These are large spaces where customers can eat varied, high-quality meals or take-home grocery items such as artisanal bread, fresh produce or gourmet meats and cheeses. Some, such as the Italian food emporium Eataly, are a single operation, while others encompass many different vendors. Developers are adding about one food hall project a week in the U.S., according to a recent report from Cushman & Wakefield, which writes, “By 2019, we anticipate that there may be as many as 200 major projects throughout the United States.”

Meanwhile, Bed Bath & Beyond just opened a Brooklyn store that includes a restaurant and space for cooking classes, as well as a blow-out bar and a portrait studio. When a new food processor or set of towels is just a click away, fighting through the crowded aisles of a big-box store is an obsolete chore. But an after-work class on “quick and easy desserts” or a lunchtime lesson in “basic knife skills” might be worth the trip.

Department stores weren’t always dull places to buy things less efficiently than you can online. In the early days, their wonders included elegant tearooms, suitable for ladies who’d never frequent saloons. Stores held concerts and fashion shows. They provided playgrounds and nurseries. They gave all sorts of lessons, from bicycle riding in the 1890s to bridge and mah-jongg decades later. They displayed original artworks. In many and varied ways, they wrapped their goods, many of them themselves new and exotic, in experiences.

“One came now less to purchase a particular article than simply to visit, buying in the process because it was part of the excitement, part of an experience that added another dimension to life,” historian Michael B. Miller writes in Bon Marché: Bourgeois Culture and the Department Store, 1869-1920.

Over the course of the 20th century, the wonder disappeared. The fun lay simply in taking a new purchase home, a trend intensified by the rise of discounters in the 1960s and ’70s and big-box stores in the 1980s and ’90s. Today’s turn toward experiences doesn’t just pose a challenge to brick-and-mortar stores. It offers them an opportunity.

For retailers and their landlords, the future lies in giving customers a place to socialize and learn. Spending time with friends, meeting new people, and acquiring hands-on skills aren’t as enjoyable online. The challenge today is to recreate the old excitement for a new era, selling not exotic merchandise and unfamiliar culture but the pleasures of human contact and physical presence.

Virginia Postrel is a Bloomberg View columnist. Her books include The Power of Glamour and The Future and Its Enemies.

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