Investing in good retail builds brand loyalty because customers can feel it a mile-off

When news broke this week that Saks Fifth Avenue is bankrupt and Australian retailer, Barbecues Galore is in receivership, I had one thought: the money men have entered the chat.

Whenever a major retailer goes bust we hear the old trope… Retail is dead. It’s too difficult to manage stores, staffing, overheads and still make money. But that ain’t it with these two retailers.

Relative to their markets, they’re both big players. They have clear value propositions and defined target audiences. Their brand recognition is strong and they’re both in growth industries. These are all green lights to thriving in their markets.

So what gives? There’s one other major thing they have in common – they’re both underpinned by private equity investors, aka the money men.

How can I tell when the money men own a retail brand? Their stores tell me all about it.

The fit-outs are old and tired. Dump bins stuffed with discounted products have crept up around the POS, and dust bunnies roll-around in the poorly-lit corners of the store.

Shopping in these stores is difficult too. There aren’t enough staff on the floor, and the ones who are there don’t hesitate to answer any question with ‘I don’t know, you’ll have to look on the website’.

Reducing overheads like fit-outs and staffing is great way to increase ROI and fulfil the investor’s modus operandi. But for the customer, shopping in these sorts of stores is soul destroying, and the experience is the antithesis of why we shop.

We shop for the theatre of it. We shop for the thrill of the chase and the rush of the purchase. We want to step into our favourite brand’s store and feel closer to them for it. Stores that are clean, fresh, beautiful, quirky, tailored, fun, clever, slick and considered invite us in and inspire us to browse, try and buy.

As tempting as it is to cut store budgets and then blame the retail industry for a brand’s demise, it’s kind of a furphy. Retail isn’t dead because people still love to shop. Sad, tired and neglected retail is dead because people hate it. Brands that invest in their stores are really investing in their relationship with the customer, and that’s the kind of store we all love to shop in.