On Wal-Mart

This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.

The New York Sun

It’s been a tough summer for Wal-Mart .The retailer recently announced its first profit decline in a decade. Democrats have taken to running against the company on issues of unionization and health care. And then a Wal-Mart spokesman, the civil rights leader Andrew Young, resigned last week amid a scandal over race-related remarks he made in an interview. The situation, however, is going to get worse. With 4,000 stores in America, and a reported 1,500 more stores on the way, Wal-Mart may soon reach a saturation point. Sure, consumers enjoy low prices on laundry detergent, lawn mowers, and dry goods. But between the Internet and the explosion of celebrity culture, Americans — regardless of their income level — are more savvy than ever about quality, luxury, and retail speed. And the market is adjusting to that knowledge at every price point.

Wal-Mart’s business model of dropping prices and increasing volume widely available worked for decades. It worked so well that brands across the retail spectrum copied the approach. In 1992, the Gap became the second-largest-selling apparel brand in America. Then in 1994, it launched the lower-end concept chain Old Navy. Today, the Gap is struggling financially. That’s partly its own doing: By schizophrenically changing its image, the Gap forced trends to move so fast that new merchandise cropped up before consumers could tire of the old stuff or justify spending more money.

Brooks Brothers, once one of America’s most venerable brands of men’s clothing, was dragged down the same path. In 1969, there were 10 Brooks Brothers stores in America. In 1988, the brand was bought by the British department store chain Marks & Spencer, then in 2001 by the holding company Retail Brand Alliance. Now there are around 240 Brooks Brothers stores worldwide, including airport and outlet stores. Ask an American man of a certain age about the quality at Brooks Brothers today, and he practically tears up. Then, to see those tears really flow, ask about Abercrombie & Fitch; once a respected purveyor of hunting and fishing equipment, this brand — owned by the Limited — now sells T-shirts to oversexualized teenagers.

The result of the decades-long push toward low-cost, low-quality goods — exemplified by Wal-Mart — is that products of higher quality and design became the exception. The luxury market? Abandoned and ceded to Europe — or, more precisely, to LVMH.

America’s forward-thinking retailers, manufacturers, and service-providers, however, know a market opportunity when they see it. Across industries, there is a renewed attention to higher standards and specialization. Shoppers may not yet know that their appetite for mediocrity has been sated, but the marketers do.

The trend toward better products is clearly visible on the road. After wallowing in decline for decades, Detroit has finally begun creating cars that can turn heads and compete with European manufacturers. At Cadillac, the design team ditched the DeVille and created the DTS, which though it is less expensive than the upscale STS, has more substance and a striking design.In an effort to emphasize craftsmanship, Cadillac will soon offer an option in which two of its cars, the XLR-V and STS-V, can be made by hand and signed by the builder. Over the last few years, Chrysler wowed the market with the PT Cruiser, then reinvented itself with the 300. The 2007 Crossfire — zippier than James Bond’s BMW Z8 — is worth buying a parking spot for. And last year, Lincoln looked back to the ’30s to revive the Zephyr, now called the MKZ, with an interior that feels like a night in a four-star hotel.

And speaking of hotels, the hospitality industry was well ahead of the automakers in the race to give consumers something “special.” The boutique hotel is now the standard for chic; anything bigger is acceptable only for the business traveler. Spa services go hand-in-hand with the boutique trend; a moment of massage-induced serenity, just a few floors below your hotel room, is now a must-have luxury.The big hotel chains are a place to rest your head — not to have an “experience,” the buzzword for which marketers live to produce a meaning.

The fashion industry is in a retail environment akin to the Wild West, with ideas ricocheting in every direction. At one level, the distance between the consumer and the desired product is shortening as technology advances. The major fashion magazines are making it possible for a reader to buy directly from an advertiser — via text message.

That development favors the big brands that can advertise in the national glossy magazines, but it makes the reader feel that she has an advantage over other shoppers: She’s got the inside track.

At the same time, the upscale department stores are differentiating themselves by signing exclusive arrangements with emerging brands. Saks Fifth Avenue took the unusual step of buying designer Ashleigh Verrier’s entire graduate school thesis collection — thus ensuring that Saks was the only place to buy clothes by the new golden girl.

Controlled distribution goes a long way in creating a feeling of exclusivity, and therefore luxury. The menswear designer David Chu sold his highly successful brand Nautica to Vanity Fair in 2003 and started up his own eponymous line. It, too, is available only at Saks, but the company has plans to locate a flagship store in an East Side brownstone with a bespoke tailoring shop on the top floor.

The good news is not just that consumers can purchase better items or sleep in softer sheets. That’s all to the good. But on a cultural level, Americans may summon something we haven’t experienced for decades, the feeling that came along with Waring blenders, Corvettes, and Donna Karan’s power suits: excitement for American design and material culture.

The New York Sun

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