Retail’s Walking Dead: These Brands Have Been Revived, But Will They Survive?
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\"zombies\"There’s a hit TV show, “The Walking Dead,”  in which a nasty plague wipes out almost the entire human race, then allows some of the decaying departed to get up, roam around, and attempt to eat the few still-living folks, who from then on spend their days and nights in a constant, terrifying quest for survival.

It’s hard not to see the parallels in retail.

Over the past year or so, several defunct retail brands, like Radio Shack, Fortunoff, and others, have been reincarnated. But unlike in the AMC show,  where we don’t know what’s allowing the zombies to keep stumbling forward, we do know what’s allowing these retailers to start moving again: all the cash sloshing around in the coffers of investors who seem to believe these brands still have a future.

In March it was announced that dELiA*s, the 90s teen fave that many believed had taken its last breath, was coming back to life this fall. No sooner had the doors closed on the 80%-off clearance sales in the chain’s 100-plus stores than a notice appeared on its Facebook page announcing it would be returning in August as an online-only store. The company’s trademarks have apparently been acquired by Fab/Starpoint, owner of a range of throwback teen/tween franchises such as Hello Kitty and Alloy.

While loyal customers cheered the “good news,” saying the brand was going “back to its roots” (it was originally a catalog retailer), dELiA*s is entering the online-only channel at a time when pure-play e-commerce growth is slowing. More online retailers are opening physical stores and even the longest brick-and-mortar holdouts, like TJX, have finally launched e-commerce sites, realizing that consumers want to shop how, when, and where they want, and that to be successful requires offering customers multiple channel options.

This need for choice is particularly true for millennials. A recent Bain study found that young consumers actually love to shop in stores, and prefer their favorite monobrand store over shopping online. While in stores, almost a third are also on their smart phones, searching looks, sharing what they find with friends, and checking prices.

Loehmann’s, the 92-year old chain of off-price stores that was a New York mainstay for generations, finally succumbed to the competitive pressures from TJX, Nordstrom Rack and Saks Off Fifth, and followed Daffy’s and Filene’s Basement into the Great Mall in the Sky. But last May, after being purchased by a private equity fund, the brand came back, offering designer duds to online shoppers.

Fortunoff, the onetime home and lifestyle store category killer, has been reincarnated as two retailers, one in jewelry and the other in outdoor furniture. These businesses are being run separately by teams comprised of family and former executive team members. Both businesses have e-commerce sites, and both are dipping their toes back into the bricks-and-mortar area.

So, what’s a poor zombie to do? Can these almost-dead businesses return to the land of the living long-term? If so, what will be required for success?

Zombie Playbook

First and foremost, they need to get out from under the old way of thinking, and find a new paradigm. Online-only is a dying business model, especially in the fashion space. To better compete with the winning retailers going the omnichannel route, these brands must explore physical distribution options.

They also need to stop focusing on themselves and their products and start focusing on their customers. Although very easy to say, this is very hard to do, especially for seasoned retail veterans who grew up under the old regime of “build it and they will come” or “put it out and mark it down and it will sell.”

Going forward, successful retail brand equity will be supported by exciting and beautiful physical stores that showcase product and tell a compelling story. It will also require a not-inexpensive combination of traditional and digital marketing. And finally, it will require marketing that is more interesting and innovative than “40% off.”

Brands courting younger consumers need to ramp up their social media and mobile commerce capabilities. Millennials consider shopping a social experience, and want to share their finds, including selfies from the dressing room, with friends before they buy. Gen Z customers, born around the same year as the iPhone, do everything on mobile today.

dELiA*s should partner with a department store like Macy’s to open in-store or pop-up shops. This, combined with the digital shopping options that lean heavily on mobile, might actually help revive the brand, provided the product is unique and compelling.

As for the others, although Fortunoff is dipping its toe back into physical retailing, its branding is somewhat contrived. Does anyone expect Restoration Hardware to launch a jewelry line, or Tiffany to start selling gas grills? Selling diamonds and picnic tables under one brand just doesn’t work. Perhaps one of the Fortunoff businesses will survive at the expense of the other.

Loehmann’s will probably not survive, however. The chain’s 2013 bankruptcy was its third since 1999, and occurred after a multi-million-dollar renovation of stores that failed to stimulate traffic. When it closed its last store in early 2014, it had hundreds of millions in debt and over a thousand creditors.  It’s unlikely they will ever go down the road of opening stores again. And it’s really hard to imagine that as a pure-play e-tailer it can make it in a world in which Nordstrom.com, HauteLook.com, Gilt Groupe and Rue La La – not to mention resellers like RealReal—are duking it out on a daily basis.

And Radio Shack….what can be said that hasn’t already? Does anyone really think this time will finally be the charm? It’s hard to imagine, frankly.

Before long, frustrated investors, seeing that the last-ditch efforts didn’t work, will most likely stop throwing good money after bad, and finally shoot some of these brands in the head.

Which, in case you’re not up on these things, is the only way to effectively disable a zombie.

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