Thread by @minethatdata

This is an interesting read from @retaildive: retaildive.com/news/art-peck-…

Retail is going to get a lot smaller ... fewer stores, less square footage, divesting from the "shared traffic" model of the mall.

Folks love to talk about the "death of retail'.

Not true.

What we are seeing is a shift in business model, away from the "shared traffic" / "maximum square footage" strategy.

Think of it this way ... back in the days of Seinfeld, you had mall-based retail (controlled by the shared traffic model) and you had catalog marketing (controlled by the renting and sharing of lists ... shared traffic).

Google, Facebook, and Amazon blew up the "shared traffic" model. In fact, they became the new "shared traffic" model.

It takes several years for this to play out. We sat back and watched brands go out of business, and individual locations go away. That's Stage 1.

Let me take that back.

Stage 1 = Google / Facebook / Amazon claim the "shared traffic" model.

Stage 2 = Individual stores and Individual brands "go away" while experts promote an omnichannel survival strategy.

In Stage 3, individual brands "fight back".

They ruthlessly untether themselves from the old "shared traffic" model ... i.e. closing tons of mall-based stores while opening a smaller number of smaller "experiential" stores in "better locations".

Stage 3 is probably good for retail, but is bad news for any brand or third-party tethered to the "shared traffic" model.

In other words, JCP and Sears can't be saved because they can't escape the gravity of the mall-based black hole they're being sucked into.

Stage 3 "could" be good for a company like Gap. The key word is "could". It's all in the execution, isn't it? One has to profitably manage the transition, and one has to have a creative sports-like entertainment strategy to reinvigorate existing stores while building new ones.

In Stage 3, you have to ruthlessly eliminate square footage ... in effect you are "tarping off the upper deck" of a lightly attended sports stadium. You eliminate whole stores, and new stores must be smaller.

In Stage 3, you use the shared traffic model of Google + Facebook + Amazon to generate discovery ... you used to need square footage to aid discovery (i.e. tell you what merchandise is available). That's over, dictating a much smaller store.

In Stage 3, you transition to a new model ... leveraging the shared traffic of Google + Facebook + Amazon, closing stale stores, opening new (small) concepts. You have to reduce square footage that did the work that Google + Facebook + Amazon now do.

We don't know what Stage 4 looks like yet ... but if you fail at Stage 3, Stage 4 might be kind of dire.

Here's a handy cheat-sheet for you to reference.