Facing an existential threat from digital-native platforms, traditional malls are taking bold steps to keep legacy retailers alive. In a significant move, WHP Global announced a partnership with major mall real estate companies, Simon Property Group, Brookfield Properties, and Centennial Real Estate, to acquire the recently-bankrupt Express, Inc. The collaboration received court approval and aims to revive the struggling fashion chain, demonstrating a strategic effort to sustain the physical retail landscape.
The revival of Express, Inc. by WHP Global and its partners mirrors similar efforts seen in previous retail industry shakeups. Historically, partnerships like this have been established to salvage well-known brands from bankruptcy, often resulting in mixed outcomes. For instance, other mall operators attempted similar strategies with brands such as J.C. Penney and Forever 21, with varying degrees of success. However, the substantial $174 million investment into Express, Inc. signifies a more aggressive approach, highlighting the growing desperation of malls to adapt to the eCommerce era.
Moreover, the focus on direct-to-consumer (D2C) channels aligns with broader retail trends where brands strive to engage directly with customers through their own platforms. This approach has been partly successful in past cases, such as with Toys “R” Us, which managed to reopen some physical locations leveraging a D2C model. However, unlike previous attempts, the current strategy with Express places a heavier emphasis on digital integration, potentially marking a new phase in retail recovery efforts.
Strategic Partnership and Investment
WHP Global, alongside Simon Property Group, Brookfield Properties, and Centennial Real Estate, has committed $136 million in cash and $38 million in liabilities to acquire Express, Inc. This substantial investment is aimed at revitalizing the retail chain, which has over 450 brick-and-mortar stores and thriving eCommerce channels. The initiative is part of a larger strategy to keep legacy brands relevant amid the increasing dominance of digital-native competitors.
The newly-formed entity, PHOENIX, will operate Express and its subsidiary Bonobos, focusing heavily on D2C channels. This approach is designed to strengthen customer loyalty and drive sales by offering a seamless shopping experience both online and offline. The restructuring actions undertaken during the Chapter 11 process are expected to provide a solid foundation for Express, improving its market position and benefiting all stakeholders involved.
Challenges and Opportunities
Malls are under immense pressure to innovate as consumer behavior shifts towards online shopping. According to a PYMNTS Intelligence study, 42% of retail subscribers shop in-store less frequently due to their subscriptions. This trend is even more pronounced among participants of Amazon (NASDAQ:AMZN)’s Subscribe & Save program. To counteract this, malls are betting on legacy brands like Express to attract foot traffic and maintain their relevance in a digital-first world.
However, the competition from digital-native brands is fierce. Fast fashion giants like H&M and Zara are losing market share to online competitors such as Shein, which has gained significant popularity among younger consumers. The challenge for malls and their partners will be to make Express appealing to Gen Z shoppers, who prefer brands’ own online stores to traditional retailer platforms. By leveraging D2C strategies, malls hope to reinvigorate Express and enhance its appeal to this key demographic.
Key Inferences
– The investment in Express represents a high-stakes effort to adapt to a digital economy.
– Direct-to-consumer channels are central to the strategy, aiming to enhance customer loyalty.
– Reviving Express could bolster the reputation of malls and attract more foot traffic.
Revamping Express, Inc. comes at a critical time for malls, which are grappling with declining in-store shopping due to the rise of eCommerce. The collaboration between WHP Global and major mall operators underscores a determined effort to preserve the physical retail ecosystem. By focusing on D2C channels and leveraging Express’s brand equity, the joint venture aims to create a sustainable business model that appeals to modern consumers. However, the success of this initiative will largely depend on the ability to innovate and meet the evolving preferences of Gen Z shoppers. The outcome of this endeavor could set a precedent for future retail recovery strategies, offering valuable insights into the integration of physical and digital retail channels.
