George Bernard Shaw once said, “Progress is impossible without change, and those who cannot change their minds cannot change anything.” Those words have a special resonance for those of us in the turnaround community, especially those who focus on retail.
We have witnessed record-shattering e-commerce growth and expansion of native e-commerce players into traditional brick and mortar here in the U.S. We are also on pace to see a record number of brick-and-mortar store closings. Internationally, fast-fashion retailers are entering and traditional retailers are exiting foreign countries at an accelerated pace. There is more change in retail worldwide than at any time in recent memory.
Yet, there is also more to the story than e-commerce that feeds what the media has labelled the “retail apocalypse.” Our perspective at Gordon Brothers is there are numerous catalysts: while Amazon is a major force, there are strong but subtle shifts in demographics, discretionary spending, shopping patterns, and retail real estate that also act as accelerants. To navigate these changes, we have prescribed an “optichannel” approach that focuses more on the ROI of the consumer value proposition than on any one channel.
To gain even further insight, this JCR issue touches on just a few topics that dive deeper into retail trends. In the three years I have been guest editing JCR retail issues, we have brought together experts who can lend unique perspective to these changes and help our community keep its collective mind open. Our authors’ wisdom helps us see new angles, enabling us to adapt and lead the kind of progress our industry needs.
Amazon’s $13.7 billion acquisition of Whole Foods earlier this year was a seminal moment. James Horgan, CTP, and Brian Koluch of PwC examine this deal and the recent entries of foreign chains, such as Lidl, to predict the near- and long-term impact for the U.S. grocery sector.
The pressures felt across retail are forcing companies to re-examine their business models, often finding their greatest asset is the brand. Ramez Toubassy, who leads Gordon Brothers’ brands business, explains how he’s applied the “assetless brand company” model to our recent investment in apparel brand Wet Seal.
AlixPartners’ Kent Percy, Luke Ericson, and Stephen Potts examine retail bankruptcy filings since 2006 to better understand why 50 percent of companies that file ultimately liquidate, a rate nearly five times higher than nonretail industries. They lay out several steps that could help more retailers prevail through restructuring.
Finally, Evan T. Miller of Bayard, P.A., and Travis Vandell and Mike Hill of JND Corporate Restructuring reveal the common pitfalls of retailer bankruptcy, with a focus on ways companies can handle fallout from the loss in customer confidence and the potential wide array of claims owed to customers for various financial obligations, including gift cards, warranties, and rebates.
On behalf of TMA and the JCR, thanks to the authors for offering their invaluable perspectives. I hope these insights help you better understand the incredible rate of change we are experiencing in retail.