What is behind the decline in retail performance?

There has been a significant number of articles written about the difficulties facing retailers and brands. In the past few months there has been reports of softness and low growth at retailers that cater to different types of consumers. Some of the retailers reporting difficulties include WalMart, Kohls, Macy’s,  and Nordstrom’s. The few positive reports stem from online sales. This raises questions as to what is fundamentally shifting and more importantly, WHY?. In our analysis, there appears to be less of a differentiation in these retailers and the products they offer. In performing store visits, the product offerings are becoming stale and worse, they are ubiquitous across competitors. The consumer is left with choosing where to shop commodity offerings by choosing a retail experience and/or price. Sadly, most retailers have decided to allow the experience decline to a point where it is evident that investment in merchandising, fixtures, and people is an afterthought to product price. This becomes a self-fulfilling race to the bottom (as price always is).  We believe the retailers that are quick to reinvest in creating an experience within their stores will realize outsized growth in the next cycle. The retailers that don’t invest in their in-store experience will find themselves left to die as consumers replace them with direct online purchases. The need for consumers to vistit retailers to showroom poorly merchandised products is becoming less important as e-tail experiences continue to improve and flexible love it-or-return it policies take command.