Fashion’s New Look for Stores: Bigger, Better, Fewer - Kanebridge News
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Fashion’s New Look for Stores: Bigger, Better, Fewer

Zara and H&M are adding beauty salons and new digital features to physical locations to renew their appeal

By TREFOR MOSS
Mon, Dec 4, 2023 9:22amGrey Clock 4 min

LONDON—Fashion retailers have found a way to make their shops dazzle customers again: make them more like Apple stores.

Brands including H&M and Zara have closed hundreds of stores in recent years to cut costs as more shoppers turn to e-commerce. Now they are investing in those that remain to woo customers in ways they can’t online.

The new-look stores are typically larger and more spacious, offer services such as beauty salons, repair stations and coffee shops, and enable new digital features such as apps that allow shoppers to rummage virtually through the storeroom.

“Now it’s about engaging with consumers and giving them an experience,” said Henrik Nordvall, manager of H&M’s U.K. business.

At the brand’s recently redesigned store on London’s Regent Street, foot traffic matters more than sales figures, Nordvall said. While in-store sales are still strong, many customers spend time there developing an affinity with the brand and then buy clothes online later, he added.

The refurbished store is home to a floor-to-ceiling TV screen that the company says is the biggest in any store in Europe, a beauty bar for customers to book nail or eyelash treatments, and a rental section where shoppers can borrow selected items, especially relatively expensive clothes from H&M’s designer collaborations.

Since the changes, the average duration of a customer visit has increased substantially, said Nordvall, who declined to provide specific numbers.

By turning their stores into destinations that shoppers actively seek out and spend time in—a model that Apple honed with its roomy, landmark stores filled with usable gadgets—the fashion retailers are redefining the clothing store for the digital age.

Retailers once needed a large network of stores “to reach people, but now they have the internet for that,” said Patricia Cifuentes, an analyst at the asset manager Bestinver. “Now stores are about brand image. They’re like tourist destinations.”

Not every retailer is following the approach of the big global fashion brands. Macy’s, for example, is opening smaller stores as a way of bringing its brand to places where customers run their daily errands. The electronics chain Best Buy is closing larger locations and opening small stores instead.

But for global fashion’s heavy hitters the shift toward fewer but better stores is well under way. While the investment could backfire if the stores fail to draw sustained traffic, for now the strategy appears to be working.

Inditex, the parent of Zara, has eliminated a quarter of its stores since 2018 and now has 5,745 locations across its brand stable, which also includes Bershka and Massimo Dutti. Yet the Spanish group’s total revenue from stores increased 8% in 2022 compared with four years earlier, with each store selling 30% more on average, Chief Executive Officer Oscar Garcia Maceiras said on a recent earnings call.

After closing its weaker locations and upgrading the rest, “We have been left with a network of bigger, better and more beautiful stores in the best retail destinations globally,” Garcia said.

Despite operating fewer stores overall, Inditex increased its capital expenditure budget for 2023 by 14% to 1.6 billion euros, equivalent to about $1.7 billion, half of which is earmarked to make improvements to stores.

Much of that money is being spent on the rollout of a new Zara store design—including at new U.S. locations in Baton Rouge, La., and San Antonio—to make the shopping experience more enjoyable.

Essential to the new layouts is making stores feel roomier by having more open space between displays so customers don’t feel crowded. With more open space, stores will increasingly have discrete in-store boutiques to highlight individual collections.

Zara has a team of in-house architects who design its stores, and uses pilot stores at its headquarters in Spain to experiment with new layouts.

Garcia, who regularly visits Zara stores around the world, said in a recent interview that store managers routinely tell him they want to expand because only larger stores are able to accommodate most or all of Zara’s range.

The Zara store in Miami is one beneficiary of the move toward bigger and better: It is doubling in size, according to Garcia, to provide the more spacious experience the company wants to deliver.

Bigger stores are more productive, Zara has found. Though stores are getting larger, sales per square foot is now up 16% relative to 2019, Garcia said.

Zara is cramming its stores with new tech such as automatic return and collection points, as well as self-checkout areas. Customers can use the Zara app to check the contents of the storeroom to see if an item is available in their sizes, for example.

H&M has shrunk its store count 14% from its 2019 peak to 4,375 outlets today. The company doesn’t break down its revenue into physical and online, and says the two parts of the business are complementary.

Increasingly, stores “are a way for our customers to get inspiration,” CEO Helena Helmersson said in a recent interview.

H&M upped its capital spending budget 43% for 2023 to roughly $1 billion, partly to push ahead with store modernisation.

Even before the Covid-19 pandemic, H&M’s leaders recognised it was time to update the physical store to offer a more engaging experience, said Nordvall, the U.K. manager. When the pandemic led to a surge in online sales, the company accelerated its effort to redesign its stores, he said.

The revamp of the Swedish brand’s store on London’s Regent Street was aimed at encouraging customers to spend more time there. It has a secondhand area, Lego sculptures in the children’s section and fitting rooms with a built-in selfie function.

H&M also uses the store to host events for shoppers who sign up for its membership program. In November, it held a party to mark the launch of a collaboration with the fashion house Rabanne.

The Japanese brand Uniqlo is still expanding in Western markets, where its footprint is significantly smaller than H&M and Zara, but it is also opening so-called destination stores.

The chain’s recently opened store in London’s Covent Garden is located in a converted Victorian-era carriage works building, where shop floors loop around a brightly sunlit courtyard beneath a vaulted glass roof. There is a Japanese tea shop upstairs with a rooftop balcony, and a florist downstairs.

Visitors can use a machine to print their own T-shirt designs, have clothes altered or mended at the store’s repair station, and lounge in comfy chairs while browsing coffee-table books.

While online sales are growing, destination stores “have become the driver of European earnings,” as well as places where the brand communicates what it stands for, said Taku Morikawa, the CEO of Uniqlo Europe, during a recent earnings presentation.

Only a memorable in-store experience will make customers trust and admire your brand, he said.



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Platforms are paying less for popular posts, brands are pickier about partnerships and a possible TikTok ban looms

By SARAH E. NEEDLEMAN
Wed, Jun 19, 2024 9 min

Many people dream of becoming social-media stars like YouTube’s MrBeast or TikTok’s Charli D’Amelio . But for most who pursue careers as content creators, just making ends meet is a lofty goal.

Clint Brantley has been a full-time creator for three years, posting videos on TikTok, YouTube and Twitch where he comments on news and trends related to the online game “Fortnite.” Despite having more than 400,000 followers, and posts that average 100,000 views, his income last year was less than the median annual pay for full-time U.S. workers in 2023—$58,084, based on Bureau of Labor Statistics data.

Clint Brantley, a full-time creator, draws an average of 100,000 views for his ‘Fortnite’-related videos on TikTok, YouTube and Twitch. PHOTO: RAJAH BOSE FOR THE WALL STREET JOURNAL

The 29-year-old is hesitant to commit to an apartment lease because the money he gets, mainly from online tips and sponsorship deals, arrives randomly and could vanish at any moment. For now, he’s living with his mom in Washington state.

“I’m vulnerable,” he says.

Earning a decent, reliable income as a social-media creator is a slog—and it’s getting harder. Platforms are doling out less money for popular posts and brands are being pickier about what they want out of sponsorship deals. The real possibility of TikTok potentially shutting down in 2025 is adding to creators’ anxiety over whether they can afford to stick with the job for the long haul.

Few overnight sensations

Hundreds of millions of people around the globe regularly post videos and photos to entertain or educate social-media users. About 50 million earn money from it, according to a 2023 report from Goldman Sachs . The investment bank expects the number of creator-earners to grow at an annual rate of 10% to 20% through 2028, crowding the field even further. The Labor Department doesn’t track wages for these creators, also known as influencers.

It can take months or years to earn money as a creator, often through a combination of direct revenue from social-media platforms, sponsorship deals, merchandise sales and affiliate links. But those who stick with it eventually see some returns, surveys show. Creators say that’s because you can learn what kind of posts most resonate with an audience, which can lead to more followers and, in turn, more moneymaking opportunities.

But money doesn’t mean big bucks . Last year, 48% of creator-earners made $15,000 or less, according to NeoReach, an influencer marketing agency. Only 13% made more than $100,000.

The gap reflects multiple factors, including whether creators work full- or part-time, the kind of content they put out and when they started. People who jumped into the space during the height of Covid-19 lockdowns—and who focused on a niche such as fashion, investing or lifestyle hacks—say they benefited from the surge in social-media use during that time.

A small number of creators shot to fame, propelling the occupation to the top of career wish lists for many teens (and adults). But behind the scenes, creators say the job is gruelling. They need to constantly produce compelling posts or risk losing momentum. They spend their days planning, filming and editing posts while also working to make inroads with advertisers and interacting with fans.

“It is a lot more work than most people realise,” says Emarketer analyst Jasmine Enberg. “Creators who make a living doing it have been at it for many years. Most are not overnight sensations.”

Like other self-employed professionals, creators don’t get paid time off, healthcare benefits, retirement contributions and other perks that companies typically provide for their workers. That reality, coupled with stubbornly high inflation and mortgage rates , is making it more difficult to get by as a creator.

Brantley works on editing a coming video. The online tips and sponsorship deals that make up his income can be erratic, so for now the 29-year-old continues to live with his mom in Spokane, Wash. PHOTO: RAJAH BOSE FOR THE WALL STREET JOURNAL

“Everything is more expensive, especially groceries,” says Jason Cooper of Mobile, Ala.

A few years ago, Cooper dreamed up a sassy sock puppet named Sock Cop, who cracks dad jokes in live and recorded videos for TikTok and Twitch. He currently makes $500 to $600 a month, almost entirely from tips.

He thinks he could probably haul in a lot more if he went full-time. But with no guarantee, the 37-year-old father doesn’t want to quit his marketing job and risk losing health coverage. He now spends a few hours in the evening and on weekends on Sock Cop. If he had more time, he would feel the need to constantly make videos.

“You’ve got to feed the beast,” says Cooper.

Shrinking platform payouts

TikTok’s $1 billion creator fund, which ran from 2020 to 2023, doled out money to eligible creators for posting to the platform. Others joined in. YouTube’s TikTok competitor, Shorts, allowed creators to earn anywhere from $100 to $10,000 a month with its temporary fund. Instagram’s Reels Play bonus program rewarded creators with fluctuating payouts. Snapchat ’s Spotlight rewards program gave $1 million a day to the platform’s top creators.

Today, the platforms have revamped or completely changed how they pay creators—doing away with their funds.

Qualifications for TikTok’s current rewards program include having an account with at least 10,000 followers with a minimum of 100,000 views in the past month. Instagram is currently testing a seasonal, invitation-only program that rewards creators for sharing Reels and photos.

YouTube debuted an ad-revenue share model last year, in which qualifying creators with more than 1,000 subscribers and 10 million public Shorts views in the past 90 days receive 45% of revenue from ads that occur between posts. Snapchat has a program that gives creators who meet certain criteria, such as having at least 50,000 followers and 25 million monthly views, a portion of the ad revenue that appears between Stories. Its Spotlight program also continues to dole out money to creators.

Creators who opt into these programs or bonuses aren’t guaranteed a significant payday.

Yuval Ben-Hayun originally became popular on TikTok in 2020 because of his posts about the word-puzzle game Wordle. The 29-year-old New Yorker eventually expanded into linguistic and other education content, and by early 2023, was able to support himself and his bills of over $4,000 a month.

TikTok had closed its fund by then but was testing its creator rewards program. Ben-Hayun said in March he received about $200 to $400 per million views, and it’s steadily declined since then—even as his follower count reached 2.9 million.

The followers are still there, but the money isn’t. He recently hit a new low, receiving only $120 for a video with 10 million views.

Danisha Carter uses her phone and a ring light to create content for her TikTok channel, where she has 1.8 million followers. PHOTO: JESSICA PONS FOR THE WALL STREET JOURNAL.

Danisha Carter is frustrated that TikTok and other platforms sold the idea of content creation as a job, but later withdrew the financial incentives. Thanks to creators’ efforts, she says, consumers are now hooked on social feeds, bringing the platforms billions of dollars in annual revenue.

The 26-year-old has 1.8 million TikTok followers, and her posts about beauty and exercise, along with opinions on topics ranging from dating to online bullying, regularly receive hundreds of thousands of views. TikTok has paid her a total of $12,000, Carter says. She sells merchandise for additional income, bringing in about $5,000 last year.

“Creators should be paid a fair percentage based on what the apps are making off creators,” says Carter. “There should be more transparency into how we’re paid, and it should be consistent.”

A TikTok spokeswoman declined to comment.

YouTube said it paid more than $70 billion to creators, artists and media companies in the past three years, and more than 25% of channels in the ad-revenue share model are now making money through it. “We remain committed to putting our full energy into what matters most for our creators, viewers and advertisers,” a spokeswoman said.

A future without TikTok?

Many creators and advertisers credit TikTok, which pioneered the short-form video genre, with driving stronger engagement than its industry peers. TikTok has gained more than 170 million users in the U.S. since its launch in 2016—including, Pew Research Center says, a third of American adults. They spend an average of 78 minutes a day on the app, according to market-intelligence firm Sensor Tower.

TikTok may not be available in the U.S. for much longer, at least not in its current form. In April, President Biden signed a bill into law that will force a sale or ban of the app by Jan. 19, 2025. U.S. lawmakers have expressed worries that TikTok poses a national security risk. TikTok’s parent company, Beijing-based ByteDance, has said it can’t and won’t sell its U.S. operations by the deadline.

ByteDance sued the U.S. government, alleging the new law violates its First Amendment rights. Several U.S. creators also sued. The U.S. Court of Appeals for the District of Columbia Circuit will hear arguments in September for both cases.

“To lose TikTok would be kind of devastating,” says Brandon Granberg , a 31-year-old creator from Bayville, N.J., known for interacting with strangers in public places in silly ways.

Granberg struggled for years to attract viewers on the app before one viral post two years ago took his follower count from 5,000 to more than one million. Recently he made $1,000 from a TikTok program that launched last year called TikTok Creative Challenge, which allows creators ​to earn money by making video ads for brands that don’t appear on their personal profiles. He also earned $2,800 for producing four TikTok videos promoting a website for people with foot fetishes. Granberg says he found it creepy, but did it because he needed the money.

While he hasn’t landed many other sponsored posts, he’s grown his income significantly by making marketing videos for small businesses over the past year. Most clients find Granberg on TikTok. “If it gets banned, it will definitely hurt me,” he says.

Changing tastes and algorithms

This year, U.S. social-media creators as a whole are expected to make $13.7 billion, according to Emarketer. The research firm projects the majority of that—$8.14 billion, or 59%—will come from brand sponsorships.

Advertisers have always led in compensating creators, paying out far more money than the social-media platforms and fans who buy merchandise or dole out tips. But these days, advertisers expect more from creators than just large followings, according to agency and talent representatives. They want to see evidence of strong engagement in the form of saved and shared posts, plus the demographics of creators’ audiences.

“Brands are looking at metrics that are far less predictable for creators and also very difficult to price yourself on,” says Sarah Peretz, a business-strategy consultant in Los Angeles who helps creators negotiate partnerships and deals with advertisers.

Some brands are more controlling than in the past, says Sarah Steele , a 34-year-old creator in Tulsa, Okla., who started making TikTok videos about being a working mom in 2020. “Now it’s, ‘We’re paying you and this is what we want you to say.’ ”

Earlier this year, Steele says an advertiser insisted she cite legal disclaimers in a series of sponsored Instagram posts. “It felt like I was reading off a teleprompter,” she says. “As a consumer it even turned me off to the brand a little bit.”

Creators, meanwhile, are having a tougher time attracting viewers, thanks to algorithm changes and other factors beyond their control. And while more advertisers are looking to partner with creators than in the past, “increased activity leads to increased competition,” says Peretz.

Another change is that advertisers now prefer to work with just a handful of creators on long-lasting deals rather than experiment with several on one-off projects, says Jess Hunichen, of Shine Talent Group.

Hunichen co-founded the talent-management agency in 2015, when TikTok didn’t exist and influencer marketing was still relatively new. Back then, an average deal size between an influencer and brand was usually below $1,000. Now, the average deal per campaign is around $10,000, she says.

Worth the hustle

Ronit Halmos of Los Angeles began making TikTok videos earlier this year that she describes as quick-reviews of restaurants, bars and more “with some sass and attitude.”

The 27-year-old, a full-time technology recruiter, recently landed her first advertiser deal. A kombucha brand asked her to make a 30-second post featuring her take on a line of flavors. Though it ended up getting less attention from viewers than her usual fare, she made $1,500 from about 30 minutes of work.

Tyler Haven , a 27-year-old traveling around the Pacific Northwest, charges $250 to $300 to make promotional videos that brands can post to their own social channels, and around $1,200 for posts that appear on either his Instagram account with more than 41,000 followers or his TikTok account with more than 10,000 followers.

Since January, he’s been posting videos documenting his “van-life” with his wife, Oak Haven: Their primary residence is a fully paid, fully decked-out 2004 Mercedes Sprinter T1N.

Haven said it’s been easy to grow his following organically. He believes it’s because his posts don’t depict some unattainable, picture-perfect life.

He quit his job in June to pursue full-time content creation.

“Even if I were to make $2,000 a month, which is absolutely nothing—that’s less than most people’s rent—I could live on that,” Haven says.

With the van fully paid off, the 27-year-old says he and his wife, Oak Haven, can get by with even a small income from his videos. PHOTO: TODD MEIER FOR THE WALL STREET JOURNAL