Michael Appel is president of Appel Associates LLC,
an advisory firm that provides services to retail and
consumer goods companies, private equity funds,
and lender groups. He has served as interim CEO,
COO, and CRO for well-known retailers, such as
Laura Ashley, Baccarat, and Wilkes Bashford, among
others, and is lead director of Things Remembered.
Appel is on the advisory board of the Fashion Institute
of Technology’s Global Fashion Management
master’s program and is a past recipient of TMA’s
Large Company Turnaround of the Year Award.
of fast fashion and super low prices
with a great store experience will likely
hurt retailers across the board, from
Aéropostale, Old Navy, Target, Kohl’s,
Macy’s, JCPenney, American Apparel
to even H&M and Forever 21. This
will be a fascinating march through
the American retail landscape.
Adapting to New Realities
Retail-focused international brands
will continue to gain market share and
outpace their U.S.-based competition.
This is reflected in their current
market capitalization, and this trend
is unlikely to change unless the U.S.
verticals and large department store/
mass retailers can adapt to the new
realities of retail (Figure 2, page 30).
U.S. retailers must recognize that
competition in the U.S. market is
now global. The face of U.S. retail is
already changing as international
retailers accelerate their rollout of
stores and e-commerce platforms in
the largest consumer market in the
world. These global retailers are here
to stay, and they intend to become
dominant players in the U.S.
These companies have articulated
this growth strategy in their
communications to shareholders.
Supported by the capital on their
balance sheets and free cash flow,
they have the means to make this
strategy a reality quickly. U.S. retailers
have been ignoring this to their
peril, with resultant liquidations
and massive closing of stores.
New York is in the forefront of this
growth strategy. The huge number
of tourists— 46 million of its 58
million visitors in 2015 were domestic
tourists—enable these brands to attract
brand recognition before expanding
their footprint across the U.S.
To effectively compete going
forward, U.S.-based retailers must:
• Focus on their core customer and
their fashion needs relentlessly
on product and price
• Convert to more of a fast fashion
model in sourcing and product
flow to stay more current with
fashion trends and improve
the use of working capital
• Adopt a lean and mean approach
to running their businesses cost
effectively in all areas, from cost
of goods to all areas of indirect
expense, to generate the cash they
need to finance capex internally
Vertical brands should consider
partnering where appropriate with
other nonvertical retailers and expand
New York I Los Angeles I Boston I San Francisco I Chicago I Sydney I Perth I Melbourne I Brisbane
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their footprint to minimize lease
liabilities. J. Crew, Bonobos, Topshop,
and Warby Parker are using this
approach as a vehicle for growth.
U.S. retail is now part of the global
retail marketplace. Retailers
who don’t respond now will find
themselves part of the history of
retailers who are no more. J