Fossil Group, a fashion accessories seller and manufacturer, announced last week that it is planning a multi-year overhaul of its business. This includes closing down some stores and focusing more on less products. Fossil did not say how many of its 610 stores it planned to close in the U.S. and Europe. The U.S. has 284 Fossil shops
Total Retail Take : It seems like Fossil had to reorganize, especially as it is designed to better align the company with customers’ shopping habits. Fossil’s online sales increased by 50% in the third quarter, while sales at its stores fell by 3 percent. Additionally, today’s consumers seem to prefer fewer products and higher quality merchandise, which has led to a reduction in merchandise.
Anchors up: Why leaving legacy retail tenants is actually good for malls
Each month, another major retailer closes shops in the malls where we grew up. Retailers should take note of the ease of online shopping and the benefits of ecommerce (lower overhead, lower inventory commitments) that e-commerce offers. A truly omnichannel shopping experience where the path to purchase flows more smoothly than linear is a sign that a smaller amount of physical space can produce the same revenue, without the need for large brick-and-mortar shops.
The question is: Will malls be next?
The short answer to this question is “No.” The short answer is no. The Class A malls, also known as “fortress malls”, which attract top tenants, are flourishing. Rents are rising due to high demand for these venues, which is also driving some retailers out of business. Anchor tenants moving away from fortress malls can be the best news.
Similar story: When a customer is lost , Retailers lose.
Anchor tenants were historically grandfathered into special leases that were comparable to the ones signed today. This was because retailers had prominent space due to the large numbers they brought in and the associated ad spend. Anchor tenants are no longer able to provide the same benefits for malls as they once did. Customer preferences have changed and customers prefer experiences to goods. Anchor tenants can have a new meaning today. They can weigh down a financially sound location, creating dead zones for foot traffic, and preventing customers from interacting with the store.
Landlords now replace anchor tenants with traffic drivers such as restaurants, movie theatres, hotels and even doctor’s offices. These huge spaces in malls are ideal for co-working spaces such as Bespoke ‘s , which is located in San Francisco’s Westfield Mall. There are also experience shops offered by brands like Sonos. Although the verticals of the new leaseholders might differ, their goal is the same as when anchor tenants were their best: to encourage traffic from new customers and provide a place where visitors can interact, connect and share experiences.
The success of malls will not depend on the amount of traffic they receive. Smart mall owners integrate technology into every aspect of the shoppers’ journey. This allows them to deliver personalized experiences that are considerate of shoppers’ energy, time and overall satisfaction. To provide an enhanced shopping experience, malls and retailers can use technology to integrate digital maps, product search via in-venue directories, or even smart fitting rooms.
Shopping mall owners have to compete for more than rent. The best mall owners think more like their tenants and work hard to improve the customer experience. Uncompetitive leases can lead to failing anchor stores. Laggards continue to think of themselves as landlords. A long-term tenant is always better than a new one. After decades of stagnant growth, we are starting to see the leaders rise and the laggards slide. It would be wrong to focus only on the losers.