More Store Closures Means Innovative Strategies

JUNE 13, 2017

It’s no secret that the retail industry has come under immense stress as in-store sales continue to slow. In recent years, retailers have suffered pretty big losses that have resulted in store closures throughout the United States.

The latest retail news that has people worried was the closure of Ralph Lauren’s Fifth Avenue Polo store. As part of its “Way Forward Plan”, the company plans to streamline its organization, work to cut costs, and reinvest in new strategies for future growth.1

Ralph Lauren’s decision to revamp its strategy is one of many examples of a rapidly changing retail industry. Analyst at Credit Suisse estimated more than 8,640 store closings by the end of 2017.2 To put this figure in perspective, 6,200 stores closed during the Great Recession in 2008. The bubble has burst and retailers are taking notes from competitors like Zara with new strategies that challenge the way retailers offer value to their customers.

“The retail industry is at a crucial point where companies must change their strategies if they want to remain profitable.”


In an industry where the most in-demand products change in a single Instagram post, Zara is what fashion-forward retailers aspire to be—ahead of the curve. The company is at the heartbeat of on-trend fashion, maintain minimal unsold stock, and they’ve successfully cornered the value-minded millennial demographic.

Zara’s ability to adapt quickly is built in the company’s DNA. Everything, from production to supply chain to sales strategies are managed in-house. When products are inspected, tagged, and ready for display, Zara’s logistics team can have them in-store and ready for sale within 48-hours.

The key to maintaining a lean operation is in Zara’s investment of personal digital assistants (PDAs) and direct channels of communication between store managers and upper-management. Exchanging information about customer feedback, new styles, and product shipments is frictionless, without the hurdles of a complicated communication network.

Zara’s lean production model can keep unsold items to less than 10% of its entire stock, whereas the industry average is between 17-20%.3 Owning and managing their entire vertical allows the company to effortlessly manage their inventory at bargain prices, resulting in minimal excess and sunk inventory.


Another retailer that uses scarcity to fuel demand is Tiffany’s—but with a twist. While Zara uses its flat organizational structure and lean production to bring fashion-forward products, Tiffany & Co. sells the Tiffany & Co. brand. A long history of dedicated branding has made luxury fashion jewelry synonymous with the “tiffany blue” robin egg colored jewelry box.

Most of Tiffany’s jewelry advertisements are paired with the “tiffany blue” color. This advertising principle has also remained consistent in its online marketing with wildly successful campaigns like the #WillYou hashtag and photos of celebrity purchases. According to a study on the social media presence and follower engagement of 10 leading luxury brands by Engagement Labs, Tiffany & Co. consistently ranks 1st on Twitter and 2nd on Facebook.4

The Tiffany & Co. brand’s in-store customer-base has a global reach with some customers coming from as-far-as Asia to visit the fashion jewelry’s stores. Historically, the company’s market is centered on tourism trends – accounting for 25% of total U.S. sales with 40% of sales in its New York flagship store.5 With a strong social media presence and follower engagement, Tiffany & Co. will continue to use bold digital marketing strategies to intrigue the tourism market.


The success of Ulta Beauty comes from its mantra of “try before you buy.” Ulta’s stores offer a variety of services, from in-store beauty salons to “clienteling” through the Ulta mobile app. The app allows customers to stay connected with an in-store associate who offers access to product recommendations and looks.

Ulta is also looking to expand on their personable approach by collaborating with online personalities. In recent years, beauty has become one of the top genres on social platforms like YouTube. These beauty gurus make the experience of experimenting with makeup and beauty tips a fun and personal.


The retail industry is at a crucial point where companies must change their strategies if they want to remain profitable. For many retailers, this change in strategy comes in the form of minimizing costs and enhancing their strengths through digital technologies.

Companies like Zara and Tiffany & Co. are using digital technologies to strengthen internal communications and expand the reach of their customer engagement. Ulta Beauty is turning beauty into a personable experience with mobile apps and online collaborations. As more retailers find success by investing into their strengths with digital technologies, the industry will find itself better adapted to the rapid changes of the digital era.

1. Mamta B. and Adam S. “Ralph Lauren closing Fifth Avenue flagship store in new cost cuts”. Financial Times.

2. Frank C. “CREDIT SUISSE”. Market Insider.

3. Lillian C. “Zara: Fast Growth through Fast Fashion”. Harvard Business School.

4. Kate T. and Kenneth C. “Christian Louboutin, Tiffany & Co. and Valentino Demonstrate Luxurious Social Success, While Gucci and Coach Are the Talk of the Town Offline”. Engagement Labs.

5. Prashanth P. “JEFFERIES: 4 reasons Tiffany will continue to shine (TIF)”. Market Insider.


Mary loves creating engaging copy that expresses the best story possible. As a member of our marketing and communications team, Mary works hard to communicate the value our products and Square Root’s mission with a positive attitude and a quick wit. Inspired by solutions and products that make people’s lives easier, she is fulfilled by knowing her work makes the world a better place one way or another. She holds a bachelor’s degree in political science and master’s degree in communication both from the University of Arkansas.