The Internet is changing the way retailers of all sizes think about how they're selling clothing and accessories. Some are worried, others are shuttering, and many more are finding new ways to exploit our love of shopping. Who will be declared the winner?
Just before 6 p.m. on a Wednesday in late April, more than 100 East Siders convened in a meeting room in the new East branch of the Milwaukee Public Library, just off the bustling, crowded intersection of North Avenue and Cramer Street.
Some of the attendees had been bused in from the nearby senior living complex, Eastcastle Place, a move that raised the median age of attendees significantly. Thirty-eight-year-old Ald. Nik Kovac was tasked with moderating a discussion on the Downer Avenue Commercial Corridor – a sleepy-sounding debate that turned out to be anything but.
The Downer Avenue meeting was part of a “snapshot” study process that began in March to address the slow decline in commercial activity on the street’s four blocks from North Summit Avenue to East Park Place.
Depending on whom you ask, including the alderman, the problem is worsened by the fact that a single landlord – Downer Delaware, an investment group spearheaded by Joel Lee of Van Buren Management – owns all the properties on three of the four blocks that happen to house vacant commercial space. The landlord is in foreclosure, but at the meeting, he defended himself and blamed the city for not issuing a TIF to help him further develop the buildings. Opinions on the matter from the crowd – both whispered and emphatically projected – were in no short supply.
That task of presenting to the crowd what kind of “tools” the city could employ to drum up more commercial activity fell to a Department of City Development project manager named Sam Leichtling. Young and trim, Leichtling academically explained the demographics of the residents in the area surrounding the Downer Avenue corridor: They have relatively high incomes, high education levels, and few families there have children.
All of these demographic markers, including the area’s walkability, are good news for retailers, Leichtling explained. The demographic data was paired with data from a market and redevelopment study commissioned by East Side businesses. According to the July 2015 study, neighborhoods that include the “East Side, Lower East Side, northern portion of Downtown, Brewer’s Hill, Riverwest, and southeastern portion of Shorewood” represent $573.5 million in retail demand, compared to the entire city’s $3.86 billion in retail demand. Furthermore, employees in those northeastern city neighborhoods spend more than $5 million weekly.
This would be great data for a business, especially a retailer looking to plant roots. But apparel and accessory businesses like the long-standing Ma Jolie and short-lived Olive are the kinds of independently owned retail shops that are having a hard time surviving there, he said. So what can the city do? They can provide facade grants, signage grants and matching grants for buildouts, and, as Kovac would later say, in an extreme case, the city will go as far as providing a million-dollar subsidy, as they did with the Downtown Boston Store in 2014.
Demand for the “soft goods market” is down, Leichtling explained to the increasingly exasperated crowd, and that’s a trend mirrored across the nation. After all, no one, including the retail giants like department stores, can escape from the Internet’s tightening grasp on the market. Even in Milwaukee, which was once regarded as a fashion manufacturing capital and had a thriving retail scene to match.
Later, Kovac explained that pressures on these small retailers “are probably more e-commerce than suburban malls,” but, he thinks, the Downer Avenue conundrum is “exacerbated” by a landlord who had too much debt on the properties.
Still, the neighborhood is emblematic of the tension faced by other neighborhoods in Milwaukee and beyond. In addition to competing against e-commerce, heavily trafficked areas like Downer Avenue, Brady Street, Martin Luther King Jr. Drive and the Third Ward must battle suburban malls. The malls like Bayshore Town Center, Mayfair Mall and Southridge have been decades-old competition for centrally located retail areas. New ones are being built, too, like Brookfield’s new Von Maur-anchored Corners development. And in the last two years, much of Milwaukee’s retail growth has been in those far-flung ’burbs. But even large department stores are up against a bevy of e-commerce companies that offer shopping temptation of the highest degree.
From flash sales to personal styling with perks like free shipping and easy returns, websites like Overstock, Amazon’s Shopbop, and the flash-sale site Gilt seem to offer more incentives than you could throw a hanger at, with the exception of a fitting room. Yet the booming online retail market is proof that shoppers seem to think their own bedrooms are as serviceable as the most tricked-out fitting rooms.
So who will win out? For now, it seems, the victory belongs to Milwaukee’s shoppers.
In April 2014, the state’s first Nordstrom Rack held an opening party for a seemingly random group of shoppers. The store was one of the first to open at the newly developed Mayfair Collection, the nearby offshoot of Wauwatosa’s Mayfair Mall, which will also feature a Whole Foods Market and four restaurants from the Bartolotta brothers. As the giddy shoppers streamed in, salespeople handed out cake pops and Milwaukee-themed snacks, plus miniature bottles of champagne. Although there are few happier marriages than booze and shopping, the opening seemed like a genuinely thoughtful gesture for a Seattle-based department store chain opening an off-price store in a notoriously thrifty market like Milwaukee. That evening, the customers seemed to respond in kind. In fact, this reporter spotted one woman dragging two carts of merchandise through the still-pristine store while sipping on the free champagne.
Now a year old, the shop still sees plenty of foot traffic. And it’s become something of an anchor for off-price brethren in the Mayfair Collection.
Off-price stores capitalize on shoppers seeking a deal on brand-name apparel and accessories, and they’ve flourished in recent years. At an off-price outpost, a Diane von Furstenberg wrap dress, the designer’s signature look, might sell for less than $200 instead of the regular price of $425.
“It’s the limited availability you’re getting at a price which is almost too good to be true,” says Steve Krogulski, CEO of Brookfield-based company Offprice. Krogulski’s company operates trade shows in the U.S. and London that connect retailers of all sizes with off-price wholesalers, whose goods are sometimes created with cheaper or surplus fabric that can then be sold at a lesser price.
For the shopper, Krogulski says, “It’s the thrill of the hunt.”
The Milwaukee market has seen the benefits of this growing retail sector. The Mayfair Collection, billed as “Mayfair Mall’s stylish neighbor,” alone counts among its offerings a new T.J. Maxx, Saks Off 5th and Nordstrom Rack. Also, a Ross Dress for Less opened in late June in West Allis, and the retailer reportedly has more area locations to come. These stores join the area’s eight T.J. Maxx stores, three Marshalls and one HomeGoods (the off-price home decor sister of Marshalls and T.J. Maxx). Parent company TJX announced in May that it would like to grow its T.J. Maxx and Marshalls business by opening 900 more stores. Nordstrom opened 27 Rack stores in 2014 alone, bringing its total Rack count to 178, which together bring in $3.2 billion in sales. This fall, Macy’s will test its own off-price iteration called Backstage, using four stores in the New York area that sell clearance merchandise and “special buys from well-recognized fashion brands,” according to a company release. And Wisconsin’s own Kohl’s opened its new off-price store concept, Off Aisle, in a New Jersey suburb in June.
In late October, Nordstrom will open its first traditional department store in the state, which will become the area’s highest-end department store. The newly constructed, 140,000-square-foot Mayfair Mall store has “been a long time coming,” Nordstrom co-president Blake Nordstrom said in a quarterly earnings call in May. The store will also offer a novel development in shopping convenience: curbside pickup and returns, Nordstrom’s Salimah Karmali tells the magazine.
Like the Rack opening, the rollout for the store has been anything but low-key, and it befits a company whose physical store sales increased 4 percent in 2014, not to mention e-commerce sales that increased 23 percent in that year. Two nights before the store opens in October, Nordstrom is underwriting a fundraising gala that will benefit three local charities. The department store even hosted a party at Harbor House in June, where guests were greeted with champagne and oysters, just to celebrate the charity recipients of the gala.
But how will the new, moneyed store affect independent retailers as well as the neighboring department stores?
Faye Wetzel is the owner of Faye’s, whose stores in Mequon and Brookfield sell midlevel-to-luxury women’s apparel and accessories. “Here’s the way I look at it,” Wetzel says during an interview at the Downtown Women’s Club. “For 25 years, I have been able to wake up and not have a major [department store] in my backyard. What other city our size does not have a Nordstrom, and/or [Bloomingdale’s] or Saks? To me, it’s just normalizing the playing field.”
Wetzel says much of her business is repeat sales from women who rely on the store for information on trends and seasonal offerings from designers. Yet she has seen the business change since she first opened her doors. “It used to be that we had two sales a year,” she says. “Now that’s a long time ago, probably more like 15 to 20 years ago, but the environment has gotten so promotional, so we have to try very hard to stay at manufacturer’s suggested retail price.”
Dennis Ervin, whose mother once guest-edited an issue of Mademoiselle, is the sales and marketing director at Brookfield’s Squire Fine Men’s Apparel. He’s equally unfazed about the arrival of Nordstrom and Brookfield’s Von Maur, and with a background that includes working as Mayfair Mall’s marketing director in the ’80s, he says he’s seen the changing tides in retail before.
“Really and truly, there’s room for everyone,” he says. “Specialty stores have to be special,” and he says he thinks what will steel Squire against the competition is the store’s “red carpet” customer service, which has included house calls and last-minute, after-hours styling appointments. “We’re not part of a Seattle-based company,” he says. “That’s not a total dig on [Nordstrom], but we’re community-oriented people. We live here, we play here, we have a feel for the community.”
Trish Kuehnl is the co-chair of Mount Mary University’s fashion department and teaches merchandise management. She has long been an observer of Milwaukee’s changing retail scene, and is curious to see what kind of ripples Nordstrom will make in the local market. Still, she’s noticed an increasing number of independent retailers.
“And they’re successful,” she says. “They’re not here today, gone tomorrow.”
Anna Zuckerman, a Russian-born Mequonite with a taste for platform heels, owns a unique slice of the local retail pie. Her first business, Mequon-based AC Zuckerman Jewelers, has seen a singular set of problems relating to specialty retail shops and e-commerce.
“[Generation Y] will not buy a diamond in the jewelry store,” she says in her Russian accent, which sometimes masks her skilled deadpan humor. “Everything is done over the Internet; it’s very difficult competing with Internet.”
Despite the younger generations’ increasing comfort with purchasing precious stones online, those shoppers almost always need a physical store to go to for repairs. As a result, she says, her repair business is up 300 percent since 2012.
“Yes, the baby boomers don’t shop as much,” she says. “They have more jewelry than they need. The next generation is Internet-savvy. Do we see dip in business? Traffic-wise, yes. Price ticket, no.”
Zuckerman also owns a children’s store, Sydney b., with locations in Mequon and Shorewood. And she recently moved another of her children’s stores, Leo and Lou Children’s Wear and Confectionery (yes, it also sells candy), from Bayshore Town Center to a high-end Mequon strip mall. She says she prefers leasing outside of enclosed malls in part because of the “brutal” store hours that such retailers must keep, but also because she wants to have fewer people trying to kill time instead of intentional shoppers.
She says she’s often heard that customers shop in malls because they’re worried about the fragile longevity of mom-and-pop stores. “My answer to that is, look at the shopping malls and see how many stores close overnight – stores that have been in business over 100 years.”
That rang true in mid-June when Gap Inc. announced that the company, which opened its first store in 1969 and whose name refers to the “generation gap,” would close 175 of its 675 North American Gap stores in the coming years. The Milwaukee area has two Gap stores as well as some of its ancillary shops like Baby Gap and Gap Body. But while the Gap store closings might be a sign of a struggling company, its parent company’s other brands, like Athleta and Old Navy, are seeing rapid growth.
The rise of chain mall stores began in the 1970s with The Limited and Casual Corner, says Mount Mary associate professor Sandi Keiser. Later came stores like Gap and J. Crew, which touted clothing basics like jeans, T-shirts and sweaters.
Forty years later, “that’s what’s getting them into trouble now,” Keiser says. “They became ubiquitous; every mall started to look the same.
“You have the millennials who want to look different and unique, and now you have all these outlets that are homogeneous. It’s not as interesting,” she says.
Mayfair Mall’s Boston Store is certainly not waiting around to see how the arrival of Nordstrom will affect its business. The store recently underwent a makeover – the only Milwaukee-area Boston Store to do so. The first floor now sports many silver accents, like beading that wraps around the building’s support columns. On the upper level, gold decor pieces and accent walls have seriously livened up a floor that had long felt like an afterthought. Even the shoe department has received luxe seating upgrades, and the merchandise tables now look sleek and uncluttered.
The remodeling has been planned for a while, says Christine Hojnacki, vice president of public relations and special events for Boston Store parent BonTon. An official celebration is in the works for mid-September, a month before Nordstrom’s opening, with a toast to an array of new mid-to-high-end brands for the store, including Vera Bradley handbags, Under Armour sportswear and an expanded selection of Michael Kors and Ralph Lauren merch.
Hojnacki says the new brands are part of the company’s strategy to localize merchandise to individual markets. “We want to be relevant to the people in our hometowns,” she says.
And while the company has no plans for an off-price expansion beyond its clearance centers, Hojnacki says, Boston Store will debut in-store pickup for online orders in the “near future.”
As much upheaval as Gap and similar midlevel brands have experienced, “athleisure” clothing – and the activewear market in general – is thriving here and around the country. Lululemon Athletica, a purveyor of expensive yoga and running clothes, opened its Third Ward outpost in 2010 and this year plans to open a location in Brookfield. Athleta, the activewear brand of Gap Inc., opened its first store in 2013 in Bayshore Town Center and its second in Mayfair late in 2014. Now, Kit and Ace, which sells cashmere basics that range from about $60-$170, and is owned by the wife and son of Lululemon founder Chip Wilson, opened a store in the former Boutique Larrieux space in the Third Ward in late July. In a prepared statement, founders Shannon and JJ Wilson, who have said they plan to open 50 stores this year alone, told the magazine they put one in Milwaukee because the city offers “a creative hub and a growing market that is ready for and appreciates innovative products.” They eventually settled on the Third Ward because of what they think is its “vibrant arts and fashion district.”
Even East Side Ald. Kovac admits the Third Ward is “probably the most successful at retail in the city,” in part because of some of the short-term leases landlords offer that allow startup retailers to host “pop-up” concept stores, which can act like a trial run at a physical store. Not every landlord offers these flexible leases, but one thing is clear: The area is playing host to young entrepreneurs who are finding new ways to make it in the retail business.
For Mount Mary’s Trish Kuehnl, gone are the days when her grandmother made her Easter dresses each year. And that’s no more apparent than when she’s talking to her students about the way they shop for clothing. “A lot of them are mobile shoppers,” she says, “and they’re very fickle. They don’t have brand loyalty like my generation has brand loyalty.
“I ask them, ‘Don’t you want to feel the product before you buy it? They say, ‘No.’”
But those Web-savvy shoppers are exactly what Milwaukee’s next generation of retailers are banking on to patronize their new retail ventures.
After receiving an engineering degree from Marquette University, 27-year-old Lizzi Weasler took an internship at Teen Vogue as a detour into fashion, a subject she’d loved but never pursued.
After the internship ended, she moved to Chicago and got a risk management and finance job, until she decided to go back to her passion. She opened her store, Lizzibeth, as a website in the spring of 2013. She sold clothing and accessories online, and also took them on the road to parties in her shoppers’ homes and event spaces, in the vein of Mary Kay and Tupperware. But she also wanted to test the local market and, thanks to Web analytics, see if Milwaukeeans would support a business like hers.
The plan worked. She found that a majority of her online sales came from Wisconsin, and just over a year later, she opened a physical store in the Third Ward. “Things were building,” she says, and opening a physical store was a “natural progression.” (Disclosure: I attended high school with Weasler.)
Now, though, she’s realized that because the majority of her shoppers are young women, her primary competitors are websites like Nordstrom.com; Zara – one of the largest purveyors of “fast fashion,” which has no physical stores in Wisconsin; and the British site ASOS, an online-only fast-fashion company. Their biggest selling points? Trend-forward clothes with great shipping deals, Weasler says.
To set her store apart, she allows customers to host events like bachelorette parties inside her store, and she also does big business with bridal accessories. Many of her customers are getting married, so they bring in their wedding dresses, and Weasler helps them find jewelry and wedding belts that fit their look.
Zach Peterson’s approach to retail has been similar. While still working locally in finance, Peterson launched his store Commonplace online in June 2014, because, he says, he wanted something different from his office job, and he felt there was a void in Milwaukee’s market for stylish men’s accessories. He also wanted to use the flexibility a website offered to “work the kinks out” of his business model and inventory. For him, the largest obstacle of starting a Web-only retail business was making Commonplace stand out in an increasingly crowded sea of online retailers.
Eventually, through social media, Commonplace’s audience grew, and so in June, Peterson opened a pop-up shop with a monthlong lease in a small Third Ward storefront near Catalano Square. (Pop-up retail initiatives have had success in mid-sized cities like Pittsburgh, and the Shops of Grand Avenue launched a pop-up program in 2012.) Peterson’s did so well that he extended his lease into July. The shop’s minimalist interior design matches the style of Peterson’s product line, which includes items like wallets, candles, backpacks and slouchy knit hats.
“If you look at the men’s market in tiers,” he says, “there’s mall-based national chains, then there’s middle ground geared toward businesspeople,” but not many stores that cater to young men. And as for how he sets himself apart from larger department stores, Peterson says he thinks his urban location will fill a void for shoppers who don’t want to make the trip to the suburbs.
Depending on the success of his pop-up venture, Peterson says, the Third Ward would be his “ideal spot” for a permanent location. “I think other neighborhoods would do well with it, but they don’t have corresponding retail there.”
Those other shops, like West Elm and MODA3 and NL Suits, mean shoppers can make just a few stops instead of having to drive to multiple locales. And for Commonplace shoppers outside of the area, Peterson plans to maintain the e-commerce side of the business no matter where he opens a physical store. “E-commerce would run smoother just to have a permanent location,” he says, partly because he can carry more inventory.
“There’s that [in-store] experience part of retail that I think a lot of [national] e-commerce stores are going back to, and I think in Milwaukee, there’s an opportunity to do e-commerce and physical [stores] because of that,” he says.
For Faye Wetzel, whose store website mostly displays the season’s new arrivals, e-commerce isn’t “a big priority.”
“If I’m going to grow my business, I have better ways to do it,” she says. And for Squire’s Ervin, who says the store’s very robust e-commerce site has generated tuxedo requests from Dubai, the website is a complementary tool for the physical store.
Jalem Getz is the founder of Wantable.com, based in Milwaukee’s Third Ward. His company offers monthly subscriptions of varying “collections,” including makeup, lingerie and jewelry, as well as shipments of clothing loosely culled by personal stylists. E-commerce isn’t for every retail business, despite national trends, says Getz. “There might be a boutique in Milwaukee that might damage their brand by going online.”
Getz describes Wantable as an “in-home” shopping business that works like a mashup of different retail trends, further blurring the line between a physical store and e-commerce. “Customers are no longer making the difference between online and offline,” he thinks.
Through free shipping and returns, his shopper’s house becomes the fitting room, and returning a piece of clothing she doesn’t like is as easy as putting a shipping label back onto a box and dropping it at a post office.
Pair Wantable with Nordstrom’s drive-up pickup and returns, and Milwaukee becomes a microcosm of an evolving retail universe in which the future holds limitless options for shoppers of all price points and all tastes.
How we shop: An abbreviated history
The barter system, including the trading of animals, is used until around this time, when the first weight-based currency, the shekel, was used to purchase goods.
The Greeks begin building cities with an agora, or marketplace.
In the U.S., the Civil War necessitates mass production of uniforms for soldiers. Previously, some pieces of clothing, like jackets and outerwear, were made by tailors, or made custom by dressmakers, but most clothing for men and women is still made in the home.
Chicago-based Marshall Field buys out his partner in the dry goods store they co-own, and it becomes the country’s first modern department store.
A tech-savvy cafe owner in Ohio invents the cash register.
Sears, Roebuck and Co. cuts out the cost of the physical store by launching its first catalog. Roughly a decade later, department stores start issuing their own credit cards.
The first Boston Store opens in Downtown Milwaukee.
Changing technology allows growth of ready-made clothing companies.
The first mall opens in Dallas, Texas.
The U.S. Department of Agriculture creates a standard women’s sizing chart to rectify inconsistencies in ready-made clothing sizing.
Junior House opens in Milwaukee and becomes a nationally known maker of women’s sportswear.
Bayshore Town Center opens.
Gimbel’s opens its third store in the Milwaukee area, and Mayfair Mall opens. In 1959, Marshall Field’s opens its first store in the area at the Tosa mall.
1950s and ’60s:
Retail aside, the city becomes known as a fashion manufacturing hub thanks to companies like Junior House, Rhea Manufacturing, fur producers, and about a dozen tanneries specializing in shoe leather.
The first “big-box” stores like Wal-Mart and Target open.
Brookfield Square opens. Three years later, Southridge Mall opens.
1970s and early ’80s:
Milwaukee independent retailers flourish. “[The proliferation of ready-made clothing] started in the ’70s and snowballed into the ’80s and ’90s. When more women worked, they had more disposable income and less time to sew. It also paralleled with fewer home economics classes where we were teaching [women] to sew,” says Mount Mary University’s Sandi Keiser.
The Home Shopping Network debuts nationally.
Amazon sells its first item, a book.
British site Net-a-Porter launches and is the first retailer to successfully sell designer fashions online.
The Great Recession begins, and many retailers, like Circuit City and Linens N’ Things, file for bankruptcy. “When the Great Recession hit,” says Faye Wetzel, “I thought, ‘How does my customer feel now? How do I have to change my ways?’”
Gilt, the first flash-sale website in the U.S., launches just before the recession, and provides limited-
time-only designer sales.
Birchbox launches. Milwaukee’s Wantable, based on the same model, launches two years later.
Stores begin digitizing receipts.
By May, $80 billion in e-commerce retail sales accounts for 7 percent of total U.S. retail sales, according to the National Retail Federation.
• “The History of Retail” by Lightspeed POS, a point-of-sale software company.
• Accounting firm KPMG’s 2009 report “The Evolution of Retailing”
• “Short History of Ready-Made Clothing” by the National Institute of Science and Technology
Claire Hanan is an associate editor at Milwaukee Magazine. She most recently profiled Wisconsin photographers Julie Lindemann and Johnie Shimon. Write to her at email@example.com.
Tune in to WUWM’s “Lake Effect” Aug. 12 at 10 a.m. to hear more about this story.