Traditional mall retailers are struggling.
Morgan Stanley recently executed a study regarding the state of specialty retail over the past ten years.
Below is a chart that illustrates the number of years that retailers reported positive comparable sales over the past decade.
Abercrombie & Fitch is the lowest, and Ross Stores rank the highest.
There’s a clear trend from the past decade: off-price stores (like Ross, TJ Maxx, and Nordstrom Rack) are thriving. In an era defined by affordable fast fashion and incessant discounting, this makes sense.
After all, many full-line stores are forced to resort to promotions and discounting when they can’t clear their inventory.
As stores like Banana Republic continue to resort to constant promotions, consumers become conditioned to pay less, making it harder for retailers to convince them to spend more.
A recent shift in spending is making it even harder for traditional retailers to stay afloat. Consumers are spending less on clothing, instead choosing to spend their money on technology, like iPhones and smart watches. This means that in order to get consumers to pay full-price, retailers have to lure consumers with a full-on lifestyle.
This is arguably why experience-driven lifestyle stores, such as Lululemon and Free People have performed well. Lululemon — which recently overhauled its New York flagship to make it a full-on experience — famously rarely discounts its apparel.
Department stores fall in the middle, though it’s worth noting that Kohl’s, JC Penney, and Macy’s all fall below-average, highlighting the dire state of the industry.
Meanwhile, mall stores have an uphill climb. As more malls shutter, these retailers need to adapt to e-commerce, but the recent rise of Amazon Fashion proves that if they don’t move swiftly, they could be doomed.
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