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The retail space is characterized by frequent change. Previously-popular brands can suddenly find themselves out of favor as shopping habits shift. Being on-trend today offers no guarantee of future performance.
Despite the fast-paced changes in consumer preferences and demand, select retailers have successfully stayed in the game for decades on end.
But despite the fast-paced changes in consumer preferences and demand, select retailers have successfully stayed in the game for decades on end. These legacy brands keep their finger on the pulse and consistently adapt their strategy to better serve the current market without losing their identities or unique appeal along the way.
In this report, we dive into five such brands – Macy’s (est. 1858), Abercrombie & Fitch (est. 1892), Gucci (est. 1921), Target (est. 1962), and Petco (est. 1965). Keep reading to find out how these companies are maintaining relevance in 2022 and what other retailers can learn from these legacy brands’ longevity.
Macy’s, one of the first department stores in the United States and the oldest brand in this report, has been around since the mid-nineteenth century. One of the secrets to Macy’s success has been the brand’s ability to tap into the full potential of its stores. As the rise of ecommerce ate into the “one-stop-shop” value proposition, Macy’s has doubled-down on the department store's role in discovery and focussed on creating an environment where shoppers can easily and efficiently browse for new brands and products.
One of the secrets to Macy’s success has been the brand’s ability to tap into the full potential of its stores.
Over the past couple of years, Macy’s has opened a variety of shop-in-shops in select stores to give people a reason to visit Macy’s locations and provide consumers with a product-discovery experience they cannot access online. To this end, the department store has implemented partnerships with Pandora, Toys “R” Us, and even Wetzel’s Pretzels. These shop-in-shops have helped bring shoppers back to Macy’s following the pandemic-induced brick and mortar retail lull.
Even before these brand partnerships, Macy’s began experimenting internally with the shop-in-shop concept to give consumers an additional reason to stop by Macy’s locations. In 2015, Macy’s launched its new off-price brand Macy’s Backstage. According to their release, the new brand brings shoppers “the best of the Macy's department store brand mixed with the fun of bargain shopping at an outlet.”
Although initially established as a stand-alone brand, management quickly shifted to bringing the Backstage brand into existing Macy’s locations. These Backstage shop-in-shops take a page out of the off-price’s playbook, providing customers with a treasure-hunt experience thanks to the constantly changing assortment of products. And following the example of other off-price retailers, Macy’s Backstage products are not available for purchase online – only in-store.
Macy’s with Backstage shop-in-shops are seeing a much better COVID recovery trajectory than those without.
By early 2019, Macy’s management found that adding Backstage to an existing store provided an average sales lift of 5% – and recent foot traffic data supports this claim. Comparing year-over-three-year (Yo3Y) changes in visits for Macy’s stores with and without Backstage shop-in-shops in the states California and New York show that Macy’s with a Backstage section are seeing a much better COVID recovery trajectory than those without.
Recently, Macy’s announced that it will expand the Backstage brand, with plans to open 37 new Backstage shop-in-shops in existing Macy’s stores. This will bring the off-price concept to nearly 60% of the chain, including the brand’s iconic flagships at Herald Square in New York City and State Street in Chicago, in addition to the nine free-standing Backstage locations that were operating by the end of Q1 2022.
The success of the Backstage concept in drawing more shoppers to Macy’s points to Macy’s continued ability to meet current market demands and answer the needs of today’s consumers.
The success of the Backstage concept in drawing more shoppers to Macy’s points to the department store’s continued ability to meet current market demands and answer the needs of today’s consumers. By expanding its Backstage concept, Macy’s is ensuring that its stores offer a unique experience while capitalizing on the growing demand for discount products – especially among high- and mid-income shoppers.
Over a century and a half has passed since the brand opened its first store in New York City in 1858, and the company is still going strong – in 2021, Macy’s venues nationwide collectively received over 370 million visits. As long as Macy’s continues innovating its in-store offerings to give shoppers a reason to visit, the brand will continue serving customers for many years to come.
Abercrombie & Fitch – the second-oldest company in our Roundup – was founded in 1892 as an outdoor gear retailer. In the ‘90s, following its acquisition by Limited Brands, Abercrombie pivoted its mission to conquering the teen apparel market, using racy images and shirtless greeters to gain popularity among its new target audience.
While this strategy worked in the short-term and the company successfully went public in 1996, the brand also faced a growing backlash – including a discrimination lawsuit filed in 2003 for its intentionally non-diverse salesforce. In the late ‘00s and into the ‘10s, as sensibilities shifted and consumers began demanding more diverse representation and sizing from their brands, the company’s aesthetic grew out of style.
The store fleet consolidation has led to a significant increase in the average monthly visits per Abercrombie & Fitch store.
In February 2017, Fran Horowitz was appointed CEO and the brand began refreshing its image and rebuilding its customer base. Since 2018, Abercrombie shuttered 23% of its stores – including most of the larger locations, and designed its new stores to be 30% to 50% smaller than previously existing locations as part of the company’s wider pivot towards omnichannel. The store fleet consolidation has led to a significant increase in the average monthly visits per Abercrombie & Fitch store.
While Netflix’s recent documentary has once again brought the brand’s former controversial practices into the spotlight, Abercrombie & Fitch has come a long way in recent years.
While Netflix’s recent documentary has once again brought the brand’s former controversial practices into the spotlight, Abercrombie & Fitch has come a long way in recent years. One of the most significant shifts was management’s decision to let go of Abercrombie’s youth-crazed image and to help the brand age gracefully along with their customers.
Instead of focusing on the teen market, Abercrombie & Fitch now caters to Millenials, leaving Gen Z to its sister brand Hollister. The generation breakdown of the trade area for over 30 Abercrombie locations confirms that Millennials make up the largest age group at 29% of visits.
The company has also shifted its branding from an exclusionary and hyper-sexualized marketing strategy and has improved its clothing quality. The change has not gone unnoticed. Not only is Abercrombie & Fitch becoming a digital retail leader, the brand is also seeing strong recovery in its existing brick and mortar stores.
Retail foot traffic data shows that Yo3Y visits to 30 Abercrombie & Fitch stores across the US has consistently outperformed the category average since April 2021.
Retail foot traffic data shows that Yo3Y visits to 30 Abercrombie & Fitch stores across the US has consistently outperformed the category average since June 2021. And while visits have taken a dip in March and April 2022, these drops are likely due to the wider economic situation rather than to any long-term strategic obstacle.
Abercrombie & Fitch has been around for over a century, and this is not the first time that the brand has reinvented itself – before outfitting models in the ‘90s, the brand dressed the likes of JFK and Amelia Earhart.
So while the current iteration appears to be working, this is presumably not Abercrombie & Fitch’s last update. To maintain its relevance into the next century, the brand will likely refresh its image several more times as consumer preferences continue to evolve.
Although Target’s first store opened in 1962 – the same year the first Kmart and first Walmart stores opened – the brand did not become the retail giant it is today until decades later. Target expanded into the Southeast in 1989 and only reached all 50 states in 2018 with the opening of its first ever Vermont store.
Today, Target operates in a league of its own. It’s not quite a department store, as much of the retailer’s apparel section consists of various private label brands; and it’s not quite a discount store, as the retailer emphasizes the quality of its offerings while also trying to give its guest a higher-end shopping experience.
Target operates in a league of its own. It’s not quite a department store, and not quite a discount store.
In 1994, Target began operating under the same brand promise of “Expect More. Pay Less,” which helped the brand cultivate its reputation for cheap-chic that resonated with its core audience of educated, middle income consumers. In the late 2000s and early 2010s, however, the retailer began losing some of its cache. As the threat of ecommerce loomed increasingly large, the brand focused on cutting costs and favored stocking consumer staples instead of fun impulse buys, which pushed some customers away.
In 2014, current Target CEO Brian Cornell took over with the twin goals of bringing quality and innovation back and ushering the retailer into the digital era. The turnaround has been spectacularly successful. The brand’s upward trajectory has continued in the pandemic era, with recent nationwide monthly visits to Target significantly higher than pre-COVID foot traffic.
Recently Target has partnered with several companies with the goal of attracting the next generation of shoppers, Gen Z.
Target has traditionally gone after older, more established consumers. In 1999, the median age of Target shoppers was 40, with only around a third of consumers 35 or younger. Recently, however, the brand has partnered with several companies with the goal of attracting the next generation of shoppers, Gen Z.
In addition to its various partnerships with direct-to-consumer (DTC) brands, Target has also built out its shop-in-shops offerings to appeal to younger consumers by partnering with popular brands Apple, Disney, and Ulta.
According to recent foot traffic trends, these shop-in-shops are giving the already successful brand an even bigger boost. Comparing year-over-year (YoY) visits to Texas and Florida Target stores with and without Ulta shop-in-shops shows that the Target stores with Ulta are seeing greater growth than its Ulta-less peers. And given that Ulta is one of Gen Z’s favorite beauty destinations, the increase in foot traffic may well be coming from younger consumers excited about finding their preferred beauty products in their local Target store.
Apple, another Target shop-in-shop partner, is also particularly popular with teens and Gen Z shoppers. Comparing foot traffic data from the Target in Latham, NY – New York’s sole Target location with an Apple shop-in-shop – to Target’s overall performance in the Albany-Schenectady-Troy DMA shows how popular the Latham location has become since the opening of the Apple shop-in-shop in February 2021. Following the launch, March 2021 visits to the Latham Target increased by 55.9% relative to March 2019, and visits remained strong throughout the year.
Target's shop-in-shops are giving the already successful brand an even bigger boost.
As Gen Z’s purchasing power continues to rise, and with the millennial baby boom on the way, Target’s investments in attracting younger shoppers is sure to continue paying dividends.
Gucci, the Italian luxury label founded in 1921, has also undergone a number of dramatic shifts in its 101-year history while maintaining its allure. Since 2015, however, under the leadership of CEO Marco Bizzarri and creative director Alessandro Michele, the brand has been experimenting with a quirkier aesthetic and setting its sights on a younger and more diverse audience.
In 2017, Gucci was the first luxury label to join Parks, an Italian nonprofit helping companies enhance diversity and inclusion. And in March 2019, the brand launched Gucci Changemakers, which includes a fund to support social change, a scholarship program, and an employee volunteer project. In July 2019, Gucci hired its first ever head of diversity, equity, and inclusion.
Recently, Gucci has been experimenting with a quirkier aesthetic and setting its sights on a younger and more diverse audience.
Looking at the average household income between 2019 and 2021 (and the first quarter of 2022) for the trade areas of five top-performing Gucci locations shows that this shift in strategy is helping the brand attract a more economically diverse consumer base. Gucci shoppers still earn significantly higher incomes than most Americans, but the average household income of visitors to these five Gucci stores dropped between 2019 – around the time the brand ramped up its inclusion efforts – and 2022.
Gucci has also been aggressively building its online channels, which has allowed the company to collaborate with aspirational yet exclusive brands without impacting the luxury feel of its stores. In January 2021, Gucci’s first North Face x Gucci Collaboration launched online, and a capsule collection in partnership with Major League Baseball was announced in April 2022.
The adidas x Gucci collection is scheduled for summer 2022. Gucci also recently launched Gucci Vault, an online platform that stocks vintage Gucci pieces and new work by emerging designers to offer customers a unique retail experience online. And the brand’s digital innovations are not limited to limited edition collections – Gucci was one the first luxury brands to release an NFT and is one of the first luxury brands to accept crypto payments in stores.
Gucci's heavy digital investments do not mean that Gucci is neglecting its brick and mortar store fleet.
The brand’s heavy digital investments do not mean that Gucci is neglecting its brick and mortar store fleet. In January 2022, Gucci opened a 10,000 ft. standalone two-story store in the American Dream mall, and in April the brand announced plans to open a similar store in New York’s meatpacking district.
Luxury apparel has flourished recently, so Gucci would likely be experiencing strong growth even without intentionally shifting its focus towards a younger, more diverse audience. Still, the brand’s recent efforts to strengthen its digital channels and move towards more inclusionary marketing will likely strengthen its position in the long run and help the brand retain its appeal with the next generation of luxury shoppers.
Like many other modern-day brick and mortar retailers who got their start as DTC brands, Petco was founded as a mail-order veterinary supplies business. So while the company has been around since 1965, it opened its first retail store over a decade later in 1976 and rebranded itself as Petco in 1979. Following a rapid nationwide expansion in the late ‘80s and ‘90s, the company launched its grooming services in 1995 and the pet industry’s first customer loyalty program, PALS (Pet Animal Lovers Save) in 1997.
In 2021, the company went public for the third time following a years-long pivot from its previous market position as a pet supply store to its new branding as a pet health and wellness provider. The shift included ending the sale of shock collars and food with artificial ingredients, and emphasizing services such as veterinary care, training, and grooming.
In 2021, Petco went public for the third time following a years-long pivot to its new branding as a pet health and wellness provider.
These efforts set Petco up for success as seen in its impressive pandemic performance. As pet adoption surged over COVID, Petco foot traffic took off, with 2021 visits higher than 2019 visits in every state . Since Q3 2020, the brand’s visit share has begun encroaching on PetSmart’s.
Petco's large and spread out store fleet also gives it an advantage over online-only retailers. The brand’s partnership with DoorDash has allowed it to offer same-day delivery from any of its 1,500 stores for a fraction of the delivery costs incurred by online–only retailers who need to ship their products across multiple zones.
Petco CEO Ron Coughlin has attributed the company’s current growth spurt to the pandemic-induced movement into suburbs and more rural areas. As people moved out of small city apartments, many adopted pets – and looked for petcare retailers near their new homes to support their pet parent journey. The company recently began testing “small town rural” store concepts to further serve the new rural residents.
Suburban Petco locations significantly outperformed the urban ones almost every quarter since Q1 2021.
Already, suburban locations are outperforming Petco stores located in cities. Taking the Houston, Texas DMA as an example shows that – although foot traffic relative to three years ago increased for both categories – the suburban locations significantly outperformed the urban ones almost every quarter since Q1 2021.
The overwhelming majority of new owners have decided to keep their pets, so the pet care category will likely continue seeing a boost for years. Petco’s investment in its rural and suburban locations and move away from supplies and more towards pet health and wellness has positioned the brand to continue increasing its share of this growing market.
Macy’s, Abercrombie & Fitch, Gucci, Target, and Petco are demonstrating that – at least in the retail space – old dogs can definitely learn new tricks. By successfully reinventing their stores, marketing, and product offerings to better suit the demands of modern day consumers, these retailers are proving that legacy brands can maintain their relevance even in the rapidly evolving world of retail.
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