While retailers are wont to blame Amazon during earnings calls, there are many factors driving the downturn in sales that are well within their control. In this, our second installment of “The Age of Amazon,” we share how consumer insights can strengthen the position of specialty apparel retailers.

Despite being the most studied generation in history, retailers have, by and large ignored the dramatic shifts in shopping behavior of Millennial and Post-Millennial consumers.

For more than a decade, researchers warned that younger customers raised on the notions of individuality and multi-cultural inclusion, and instilled with an appreciation of learning differences, female empowerment, and LGBTQ rights, were unlikely to respond positively to messages of conformity, exclusivity, decadence and conspicuous consumption.

Consumers who are more concerned about the effect of their carbon footprint, who are busy “checking privilege”, and asking what gender pronouns you prefer, tend not be interested in the traditional, binary messaging that most specialty apparel retailers continue to peddle.

Despite a sea of ink being spilt on this subject, most retailers have continued to market and sell to Generations X - Z in much the same way they did to Boomers. But today’s young consumers appear to be having none of it. Indeed, it appears we have reached the tipping point, with traffic and sales plummeting – fast!

...it’s as if no one at these retailers even knows who Lena Dunham is, much less seen an episode of “Girls.”

Abercrombie & Fitch of course paid dearly for their former CEO Michael Jeffries  insistence on sticking way too long to its “beautiful in-crowd” brand strategy which featured unattainably perfect, mostly white, mostly nude models adorned in clothing festooned with brand logos. Rather than an anomaly, A&F appears to have been a harbinger of things to come.

Millennial and Post-Millennial consumers are rejecting retailers who continue to feature size-zero, airbrushed models, dressed in ensembles resembling a fifty-something man’s idea of what’s sexy. Increasingly young women define their aesthetic and their sexuality on their own terms, but it’s as if no one at these retailers even knows who Lena Dunham is, much less seen an episode of “Girls.”

Just as the now infamous Pepsi ad starring Kendall Jenner would have benefitted from just one person of color being in the room at the ad agency when it was first screened, one wonders whether there is a single twenty-something female whose voice is being heard in the board rooms of most retailers.

There are, of course, a few exceptions to the rule. For example, Aerie has designed product that appeals to young women rather than adult film stars, and has found at least a couple of models larger than size two to feature in its ads. REI has combined atypical real estate strategies with a compelling loyalty program and differentiated product to great success. But, those are indeed the exceptions. Meanwhile, over at Lulu Lemon, the product still rocks, but the brand attitude remains too exclusive for consumers that are increasingly practicing yoga to escape, rather than embrace status climbing. And then there’s Express which seems unsure of whether it is a lifestyle brand with edited assortments or a cheap chic fashion emporium.

So, what’s a specialty apparel retailer to do in the Age of Amazon?  VENN has identified five imperatives that every specialty retailer must confront if they are to survive and thrive:

1.     Keep it real - put down the air brush, embrace a wider definition of body types and accept that multi-cultural diversity is here to stay. Celebrate realistic lifestyles and stop with the body shamming.

2.     Go low (or high) - the once great middle class is shrinking quickly, and even those that still occupy this demographic favor low-cost goods for most purchases while prioritizing a select number of higher priced purchases for the things they really desire or value. While promotions still matter, everyday price matters too, and if it isn’t at the low - end or high - end of the market, the chances of the offer succeeding grow fewer with each passing day.

 3.     Create compelling experiences - as we’ve seen with grocery, Amazon is aggressively re-engineering retail as we know it. Fair or not, the lack of accountability by the Street for Amazon’s profitability allows the company to first attack incumbents, and then emulate traditional retail practices by building the very brick and mortar they just destroyed. There is little reason to believe Amazon will do anything different when it comes to apparel, so those brands that hope to compete will need to work hard to create unique brick and mortar experiences that play to their distinct strengths in ways that Amazon can’t easily replicate.

 4.     Make Amazon a “Frenemy” - as sacrilegious as it may sound, a fair number of specialty apparel brands now find themselves at the point where embracing a partnership with Amazon may be worth considering. If achieving a state-of-the-art, omni-channel presence isn’t a near- term possibility, partnering for may be the best shot at survival.

 5.     Follow your customer out of the malls - as we’ll detail in our next installment ab out the impact of Amazon, the future of brick and mortar is obviously urban. While we acknowledge that converting from malls to main street is easier said than done, given lease commitments, this trend is so obvious that it begs the question as to why retailers aren’t experimenting more with alternative formats.

Mike Bills