Marquette University marketing professor Felicia Miller can’t help feeling a little puzzled when thinking about some of the recent forays into brick-and-mortar retail she has seen in the Milwaukee area. It’s not just that developers are willing to build and businesses are still willing to brave the prevailing winds of e-commerce and open physical stores in places like the Corners of Brookfield just west of Milwaukee, Oak Creek’s Drexel Town Square and Greenfield’s 84 South, it’s also the types of stores that have been coming in.
Professor Miller noted that at least two of the recent additions, Von Maur in the Corners of Brookfield and Nordstrom in Wauwatosa’s Mayfair Mall, tend to aim for wealthier customers. “Actually, it’s a mystery to me why any traditional department store is expanding now,” Miller said. “And with Von Maur, it’s completely counter to the trend because they are going high end.” That trend has indeed been a rough one in recent years for retailers throughout the country. Even though e-commerce still accounts for only slightly more than 10% of total retail sales, it has been a hugely disruptive force.
The latest blow to brick-and-mortar retail in the Milwaukee area came in mid-November when Bon-Ton Stores Inc., the parent company of Boston Store and other department stores, announced it would be closing at least 40 of its 260 stores. Bon-Ton, which has lost money for the last six years, made that decision public while reporting another disappointing quarter for sales. And Kohl’s, another Wisconsin-based retail giant, has likewise struggled. The Menomonee Falls-based company reported in early November that its profits had fallen by 18% in the third quarter. Rather than closing stores, though, Kohl’s executives are hoping to weather the storm merely by reducing the size of existing locations.
Miller said department store chains like Boston Store, Kohl’s, J.C. Penney and Macy’s will continue to struggle until they find some way to differentiate themselves from the common run of their kind. She said most of these brands were built on the notion that they could offer customers the ease of being able to find a wide variety of goods in a single place, but if convenience is the goal, none is in a position to compete with online retail sites—where shoppers can find a veritable cornucopia without even having to leave their homes.
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Miller said most retailers know that their best hopes lie in finding ways to distinguish themselves not only from online sellers but also their brick-and-mortar rivals. That’s easier said than done, though. Retailers might try to stand out by offering goods that can’t be found anywhere else. Yet most manufacturers still want their products to be on sale at a wide variety of outlets. Brick-and-mortar retailers can also promise better customer service than shoppers can find online. It’s not always an easy pledge to fulfill, though.
Going Local?
Strangely enough, current circumstances are in many ways more favorable to small, locally owned shops. Doug McDonald, general manager of the small Mod Gen store in Milwaukee’s Third Ward, said he considers himself fortunate in that he doesn’t have to rely on online sales. In fact, after giving e-commerce a short try, McDonald and his colleagues at Mod Gen (the name is a shortening of “modern general store”) have chosen to concentrate solely on the physical store.
McDonald said he had for a while bought into the idea that all retailers would either have to go online or risk losing out to nimbler competitors. It did not take long, though, for McDonald to see that e-commerce made little sense for a small business. To cover shipping and handling costs, he said, he found himself having to increase his prices by as much as 20%, “and the catch-22,” he said, “is that you can’t price your online products differently than your brick-and-mortar products.”
Rather than try to build up a big online business, Mod Gen doubled down on brick-and-mortar retail, moving its shop in 2016 from Capital Drive in Shorewood to its current location in the Third Ward. A big part of the district’s appeal, McDonald says, is its mix of not just shops but also restaurants, entertainment venues and hotels. With retailers like the women’s clothing store Francesca’s and the eyeglass seller Warby Parker having recently moved in (and more likely to come) the district seems to be only gaining momentum. “It’s been great,” McDonald said. “To have this community and the Public Market and hotels. And being down the street from where a lot of things happen, like Summerfest.”
Development Beyond Downtown
Outside the Downtown area, developers are hoping to give retailers similar advantages by making shopping just one of several reasons to visit their properties. In Oak Creek, the Drexel Town Square development offers a mix of retailers, restaurants, apartments and entertainment options, and beyond that development, the project is having offshoots. Road work related to Drexel Town Square has been cited as being instrumental in the city landing Wisconsin’s first Ikea store. Elsewhere, in the town of Brookfield, the Corners of Brookfield is offering a similar assortment of luxury apartments, a Sendik’s grocery store and restaurants.
Robert Gould, vice president of IM Properties, one of the developers of the project, confirmed a primary goal is to provide shoppers with experiences they can’t necessarily have elsewhere. As examples, he noted that the Corners of Brookfield’s Kendra Scott jewelry store lets customers design their own jewelry; its Anthony Vince Nail Spa offers food and wine; and its Sendik’s Food Market regularly puts on cooking demonstrations. As Gould wrote in an email, “We have developed a tenant mix that has embraced and is not threatened by e-retailing, and we have been careful to assemble a mixture of first-to-market brands, fresh and relevant national brands and strong local brands.”
Meanwhile, older malls have been working to give themselves a new sheen—even as some of their anchor tenants move into smaller quarters or even close their doors. At Brookfield Square in the city of Brookfield, the owners have responded to Sears’ plans to reduce the size of its store by entering into discussions with WhirlyBall, a Chicago-based restaurant and tavern chain that features bumper cars and other games.
Amid all the doom and gloom, there are a few optimists who believe that some of these endeavors at least will result in success. Dick Seesel, principal at the Mequon-based consulting firm Retailing in Focus, said it would be unwise to count out brick-and-mortar retailers. Seesel, who worked for Kohl’s for 24 years, said he has noticed that many department stores are beginning to make better use of their physical space. Kohl’s and Macy’s, he predicted, will find that their prospects now depend on how well they are able to make their online business complement what they are already doing at their brick-and-mortar sites. As for higher-end retailers like Nordstrom, he said it’s inconceivable to think that company officials did not precede their decision to come to Milwaukee with market research. “It was long overdue,” Seesel said. “A lot of people were driving to Chicago to shop at Nordstrom. So that made perfect sense to me.”
Brenna Sussman, a spokeswoman for Nordstrom, did not discuss precisely why company officials eventually picked Milwaukee for a new store, but she did say that Mayfair Mall was an easy choice. “Mayfair is a top shopping center for this community, so it was a great fit with our strategy of opening stores in the best retail locations,” she said.
Miller agrees with Seesel that some retailers are making better use than others of their brick-and-mortar sites. She gave particular credit to Macy’s for reducing the size of its physical stores while finding ways to drive shoppers to its website, in part by carrying fewer products on its shelves, but still, Miller says that many retailers are far from knowing exactly what they should be doing with their physical stores. For many, the coming holidays will be a test of whether recent changes to their business plans have done any good at all.
“Again, with all the discounting and competitiveness,” Miller said, “there are probably going to be more losers than winners.”
