Gypsy Wagon—an entrepreneurial retail vision of Carley Seale, who opened her first store off Henderson Avenue in Dallas—has expanded to two other cities. Stores carry handpicked gift and home items produced with recycled or sustainable materials. (Sierra McGee/Courtesy of the Gypsy Wagon)

With e-commerce’s stake in U.S. retail at less than 10 percent, suggestions of a “retail apocalypse” of brick-and-mortar stores is greatly exaggerated, panelists said during a ULI North Texas event on the retail sector. Still, panelists at an event in Dallas said the industry has to find new ways to reinvent itself and connect with customers in order to thrive.

“What we did . . . ten years ago doesn’t work anymore,” said Valerie Richardson, vice president of real estate for the Container Store Inc. “We are in a tectonic-plate shift in our industry. For those of us with longstanding brands, it’s critical that we go deep into our customer base and understand what our customer needs and respond to that appropriately.”

Though Richardson said she does not believe Amazon or other e-commerce retailers will take over the $5 trillion U.S. retail market, she did caution that retailers need to stay relevant, offering products, services, and marketing that appeal to millennials. These consumers prefer “experiences” such as entertainment over spending on store-bought goods, she said. Eventually, as they age, millennials will surpass the baby boomers as the generation with the most purchasing power, she said.

Kim Williams, vice president of store development for Starbucks, and said the coffee retailer is reinvesting in its existing stores to provide experiences that will attract millennials and others. In its central region, which Williams oversees, Starbucks will open 120 stores, but will renovate 270, she said.

“We are finding new ways to connect with our customers; it is mostly through social media,” she said. Social media efforts attract customers to the stores, where they can try new products and new store concepts such as the Starbucks Reserve coffee bar. The first Starbucks Reserve coffee bar in Texas opened in June in the tony McKinney & Olive building in Uptown Dallas; the second is to open in Plano’s Legacy West. Starbucks Reserve coffee bars are designed to offer a “craft” coffee–drinking experience with small-lot specialty coffees and a more interactive experience with the baristas.

Figuring Out What Works

Panelists included Brad Syverson, vice president of real estate for JCPenney, a legacy retailer that has struggled in recent years. The Plano-based firm announced earlier this year that it would be closing 138 underperforming stores.

“We are constantly innovating and reinventing ourselves; that is just critical,” Syverson said. “That’s not an easy thing to do with a legacy portfolio and a legacy brand, but we think it is important to differentiate ourselves.” JCPenney has expanded its online presence and has added new products in order to be less reliant on clothing.

Syverson said he does not expect an immediate end to malls, where many Penney stores are located. “On behalf of malls and their tenants, I want to say the reports of their deaths have been greatly exaggerated,” he said. Many different kind of malls exist, he noted, and though many JCPenney stores are located in Class C malls, that is because those particular trade areas are not large enough to support a larger mall. Many of those smaller facilities are the only mall in town and are doing very well, he said.

“Some of our highest-volume stores are in that kind of situation,” he said. “There are certainly malls that are declining, and the impact of that on us as a retailer is very much a mixed story.”

Finding Their Way

The Gypsy Wagon Inc.—an entrepreneurial retail vision of Carley Seale, who opened her first store off Henderson Avenue in Dallas about ten years ago—now has four stores with locations in Dallas, Austin, and Crested Butte, Colorado, and plans more. The stores carry handpicked gift and home items produced with recycled or sustainable materials.

Seale, a member of the retail panel, said she launched her vision with a bit of savings and a credit card. “I try to do the most I can with what I have,” she said. That means sometimes wondering if she has stretched her finances a bit thin. “I think as an entrepreneur you have to be able to function that way and really like it,” she said. “I feel like we’ve barely scratched the surface in terms of what we are capable of doing.”

Seale said her company is nimble, and she constantly asks her customers what they want, which works to her advantage over larger stores.

Jason Needleman, chief executive officer of luxury linen company Peacock Alley, said the firm started out as a manufacturer of such linens before branching into retail. Buyers want to touch and feel sheets and towels before they buy them, he said.

Peacock Alley spends a lot of time obtaining high-quality cotton from around the world and finding expert artisan weavers to produce an impeccable product, Needleman said. About a third of its product is sold by general retailers, a third is sold by small specialty stores, and a third is private label. Though the company has seen specialty retailers decline, it has seen an increase in wholesale purchases by interior designers, he said. The company is looking at the opportunity to open more stores, but is being cautious.

“We do see an opportunity for our stores, and e-commerce has been part of our network for about six years and continues to evolve,” he said.

The endgame for all retailers seeking future growth, including those that want to reach millennials, is the same, said the Container Store’s Richardson: “Understand what the customer needs, and deliver it.”

Addressing the Hurricanes

In the aftermath of the hurricanes that ravaged Texas, Florida, and Puerto Rico, the panelists representing national brands said in emails that they have had to address some impacts, but that long-term strategies are unchanged.

“Our Starbucks strategy has not changed based on the storms,” said Williams of Starbucks. “We did temporarily close several hundred stores in response. . . . [H]owever, a majority of our stores reopened shortly after. We prioritized our store partners and their safety. We continue to provide assistance to our impacted partners and stores.”

Williams said Starbucks will fully rebuild five stores in Houston because of significant damage, but added, “Our strategy to continue building new stores, renovating stores, and relocating stores where necessary remains the same.”

JCPenney closed its seven stores in Puerto Rico before Hurricane Maria arrived and has since reopened its San Juan location, offering a 50 percent discount on merchandise and an extra 50 percent off clearance items to aid hurricane victims. In Houston, the company doubled its staff to 5,000 employees to serve shoppers restoring their homes and to aid local job seekers. It also has made available funds to help associates experiencing financial hardship caused by the hurricanes.