Observations From My Semi-Annual Trip to the Mall, Part Deux

As I mentioned in the previous article, Observations From My Semi-Annual Trip to the Mall, Garden State Plaza is one of the most "luxury-oriented" malls in the Country, and hence probably not a great representation of what the retail picture looks like for most Americans. Thus, I ventured out to one of my absolute least-favorite places on earth (not as bad as the Port Authority, but worse than the DMV), Willowbrook Mall in Wayne, NJ.  It is with great pleasure that I now present to you, in absolutely no particular order, my observations from the mall:

• As evidenced from the store listing we'd expect patrons at this mall to - on average - represent a lower socio-economic bracket than at Garden State Plaza.  It doesn't take a rocket scientist to realize that shoppers at this mall are more ethnically and racially diverse than those at Garden State Plaza.  Additionally, as evident from the dress/appearance/behavior of many mall patrons, it seems evident that on average, shoppers here look to be less socio-economically well-off than those at the mall I visited last week. 
• Related to the previous point is the fact that this mall does not have as many upscale stores as did the mall I visited last week.  Of course this leads us to the classic 'chicken or the egg' question - that is, do more affordable stores (on average) draw a less well-off socio-economic clientele, or does the prevalence of said shoppers result in more discount retailers moving in?  Unfortunately, the answer to this question is beyond the initial point of this post (whatever that point may be?), so I'll leave it to you to ponder.
• I meandered into Lord & Taylor (a store I consider to be an also-ran to the likes of Neiman Marcus and Nordstrom, even despite recent restructuring efforts), and, confirming this preconceived notion, I noticed that I was but one out of maybe a handful (literally, maybe 5 at most) shoppers on the entire top level, which measures roughly 65,000 square feet, just to give you an idea of density.  Also, insofar as a store can be judged valuable  based on the quality of their bathrooms, Lord & Taylor gets a AAA rating; the same sort of AAA rating S&P gave to a bunch of 'high-quality' CDOs, that is.
• Getting back to my 1st point, (well, really completely unrelated to my 1st point), I noticed that people at this mall were either pretty good looking, or complete mutants; no "normal distribution" here, no sir.  I find myself alternating between what would likely be considered inappropriate staring in most States, and cringing in horror.  I digress...
• Apparently I'm a glutton for punishment, and yet again I decide to go into The Gap, and as an astute commenter pointed out to the last article (possibly on Dealbreaker), their "fashions" are laughable, at best and downright painful at worst.  As far as I can tell they haven't refreshed their lineup (at least on the Men's side) for the better part of a decade.  Can someone please tell me how Dan Loeb, Chapman, or someone of their ilk hasn't torn this company a new you-know-what yet?  Seems like an easy target if ever there was one.  Although on second thought, I suspect the heavy insider-ownership is a bit of a deterrent, but the ambitious activist wouldn't even need to bring in McKinsey to come up with a new strategy.  Really, I'll save them the trouble, free of charge:  Don't sell ugly, boring, poorly-made crap.  Wasn't that easy?
• Mens shoes are really fugly.  What is it with this Cody Willard-esque, pre-distressed, pointy-toed garbage? 
• As if it weren't entirely obvious already, I notice at least 2 or 3 different stores that stock generic versions of Crox, which sell for significantly cheaper than the Brand-name product.  Does this company still actually do any business to rationalize a $900 Million market cap?  I estimate this probability to be somewhere in the range of {0, none}.
• Finally, I fight my way through the unwashed (or so it smells) masses to my main target: Aeropostale.  Last week they put up "impressive" same-store sales (y/y) numbers in the ~25% range, but I was extremely skeptical as to how these results would trickle-down to the bottom line.  Well, lets just say if my store visit was any indication, their margins aren't exactly going to be expanding this year.  "Men's" style t-shirts were - if memory serves - 2 for $20, with similar discounts throughout the store.  Average age of shoppers seemed to be around 14-15, although I saw some freak outliers at both ends of the spectrum which really scared the hell out of me. (As an aside, if you are 35+ you should NOT be shopping - no matter how great your body is - at the same store as 12-year olds.  End of story.)

In all, I want to get some things across that I've been able to glean from these slightly-less-than-pleasant journeys to the mall.

First, even some higher-priced, luxury stores seem to be heavily discounting merchandise to drive sales.  This trend is even more pronounced as you move down the luxury/price ladder.  While this merchandising strategy may serve to keep same-store sales afloat and maintain inventory turns, the inevitable margin erosion will eventually come back to  bite the retailers when they can least afford it.

Second, who shops at department stores anymore?  Sure, sometimes Nordstroms or Macys to get some basic items like ties or the occasional pair of jeans, but can they really continue to rationalize such the expenditures to maintain, stock, and staff (etc) such large stores?  And that is to say nothing of the proprietary merchandising operations many still support.  It has been a long time in coming, but I feel that the death of many big department stores is upon us now, more than ever (Sorry NRDC Equity Partners).

Thirdly, I've noticed over the past few years that retailers seem to be especially inept at utilizing modern ERP systems, especially when it comes to inventory planning.  Depending on when during the re-stocking cycle you visit a particular store, it is - to varying degrees - painfully obvious retailers are not effectively utilizing their POS (Point of Sale) data to better plan and manage their production and supply chains.  In 2000-freaking-8, it is not difficult to gather, analyze, and furthermore utilize sales data to garner information on, say, the distribution of various styles by size.  Proof of this ineptitude can be seen everywhere;  pick your favorite store and go through some racks (department stores are especially bad offenders here) and just eyeball the sizes.  Inevitably, (at least on the male side) the distribution will skew left, that is, theres countless XL's, XXL's, etc, and relatively few mediums.  This also explains why much of the inventory at discounters such as TJ Max, Century 21, etc. happen to be freak-giant-sized.  I'm sure someone at McKinsey or Accenture has taken a closer look at this apparent phenomenon, but the proof is in the pudding.  Unless my MIS101 professor was lying back in the Undergrad days, retailers have plenty of room for improvement here.

In conclusion, malls suck, but I hope at least one or two of you have taken something useful away from my (mis)adventures. 

Disclosure: Anal_yst is short Aeropostale, more-so now that he's actually visited the stores.  1-2 Knockout is totally cool with (most) Mutants.

Comments

[Calgary Schmooze]

Dana Telsey better watch out! Her territory is being anal-ized.

If you think your retail sucks ass, fly up here and give it a rip. Nordstrom and NM are practically paradise by comparison.

[Bulging Bracket]

No one remotely intelligent gets hired into retail. Walmart is about it, and even then it's limited. Department stores, especially high end ones, pull out of the shallow end of the IQ pool.

High-end retailers can get good creative types, but really aren't going to appeal to useful people in other roles, since they don't reward them or provide a good career path. Fighting the internal political battles necessary to screw over the creatives is going to waste your brand - see Gap's improvement in systems but still utter futility at style.

[Anal_yst]

@ Schmooze
Anal-izing Dana Telsey is definitely something I'd be interested in, er, I mean...

@BB
Reality seems to support your point. Apparently retail "analysts" also pull from the same pool, hence the complete and utter idiotic obsession with same-store sales.

[Calgary Schmooze]

Now how did I know that you'd say that?