Consumer Spending Still Defies Gravity, Luxury Retail Winners and Losers & Untangling AI Shopping Agents

Michael LeBlanc (0:07)

Welcome to Remarkable Retail Podcast, Episode 314, the only podcast brought to you by two of the NRF's top retail voices. Well, at least for the next 86 days anyway, and then I'm riding your coattails. I'm Michael LeBlanc.

Steve Dennis (0:19)

And I'm Steve Dennis.

Michael LeBlanc (0:21)

Get your Birkin bags out. It's our focus this episode on the luxury retail sector, taking the pulse to check up and to check in with a reference back to Steve's annual predictions. Steve, when I think about luxury, I think of flights to Dubai to grab a watch or a hard to find handbag. Those shopping trips just aren't as fun as they used to be.

So lots of pressure on the luxury category, but it's a great opportunity for a check in.

Steve Dennis (0:46)

Yeah, two of my predictions dealt with the luxury industry. So we kind of kill two birds with one stone or whatever cliche we want to use.

Michael LeBlanc (0:54)

Well, and speaking of luxury, you were just in Chicago for a wonderful event, and you being you took the opportunity to go do some retail checks. Talk about your walkthrough at Bloomies.

Yeah.

Steve Dennis (1:07)

Well, I went and I want to get two in the weeds with this if people don't know the area, but there's a mall called the Old Orchard Mall in Skokie, Illinois. So that's north of Chicago, and it's actually an outdoor mall.

So it's got kind of a typical configuration and some of the usual suspects like Nordstrom and Macy's there. And they used to have a full line Bloomingdale's store, so quite a large store down at one end of the mall. They closed that, I want to say, maybe three or so years ago.

But they fairly recently opened Bloomingdale's, and folks may know or remember that Bloomingdale's has been experimenting with a small format store called Bloomingdale's. The first one they opened was outside of DC, which I visited, I don't know, 18 months ago, two years ago. And I thought it was very nicely laid out, good visuals, you know, super organized, but I wasn't really getting exactly what they were hoping to do with this. It seemed very niche-oriented. Well, turns out the Bloomies in Old Orchard, I like quite a bit more. It's actually two stories, and I'm guessing maybe three times the size of the original Bloomies, but much smaller than a typical Bloomingdale store. They seem to have really edited it against a certain price point, more contemporary, so it really makes sense. You can really get the clarity of the merchandising vision. It's not so large that it's difficult to navigate, but it's also not so small that you feel like it's a big compromise. So I have no idea how well that store is doing, but listeners will know I often just get amazed by just how huge a lot of these old department stores are, make them very difficult to shop. This to me was a very different experience. Now even under the best case scenario, I'm sure that location is not doing nearly as much volume as they were doing in the much larger store. But to me it feels much more clear a reason for the store to exist. And it's quite close to the Nordstrom store. So it's kind of an edited version of a Bloomingdale's or a Nordstrom. So we probably won't get much information on how that particular store is doing. But it will be interesting to see if I guess A, Bloomingdale's is committed to continuing to open these stores, and what those next ones look like. So they've got now pretty good range between something like 9,000 square feet and something probably closer to 30,000 square feet.

Michael LeBlanc (3:35)

Well, you grabbed the phrase right out of my mouth, so to speak. I was going to say that whole reminds me as I listen to you about edit to amplify, right? And the challenge of choosing what the assortment looks like in a smaller format store. I was super impressed by the Bloomingdale tour that we did in New York City, particularly on the second floor. Now, on the second floor, is that where their housewares and brands, or do they put women's apparel up there?

What approach did they take on that second floor to get, I imagine, beauty on the first floor?

Steve Dennis (4:00)

Actually, the second floor is in the basement.

You actually go down. It's got a big, beautiful staircase. The main floor is women's very edited, but very nice cosmetics, beauty area as you come into the store. Downstairs is men's, kids, and home. I think home is a little, I mean, many people would know home has traditionally been a really good category for Bloomingdale's, because that's not so fashion-focused, like the rest of the ready-to-wear and all that kind of stuff, you could get it organized or understand how it's positioned with a younger, contemporary, more accessible, luxury kind of customer. The home, there's not much of a style point of view typically in home, so that's definitely a truncated assortment. Personally, I wonder if it's really worth doing.