The importance of physical stores "is way bigger" than the Internet for retail, L Brands CEO Leslie H. Wexner told investors and analysts on Tuesday.
Opening and remodeling impressive physical stores is much more important for the retailer, Wexner said, who noted the approach is paying off for the retail company’s Victoria’s Secret brand.
Wexner told the audience that while speciality stores benefit from a great fleet of stores, department stores are “dead” and need to "reinvent themselves."
Wexner’s stance appears to be based on on his view of human nature and the power of branding, plus a willingness to dedicate capital to store improvements. He said that a muscular brand will bring web sales naturally, and that focusing on web sales is, essentially, backward.
“We’re not as fascinated — have never been as fascinated — with the Internet as you are,” Wexner said. “If you build the brand, the Internet will follow.”
He maintains stores will remain important is because humans want to be—and shop—together.
“People like to go shopping,” Wexner said. “The more that you can talk to that supercomputer in your hand, the more you are isolated from other people. We’re pack animals. I’m very optimistic we’re going to see a renewal of brands.”
In addition to the need to renovate stores, Wexner implied that location matters. Some malls are suffering from where they were built decades ago, but the ones with good locations will continue to thrive, provided the stores inside them are also thriving, he said.
“Most shopping centers are obsoleted by geography,” he said. “Those that aren’t are actually doing better. If you walk a mall, the guys not doing well wouldn’t have done well 20 years ago.”
Wexner had sharp words for department stores, which he seems to believe don’t have the stomach for the kind of investment and creativity it takes to run a store in today’s world. Some retailers, like department stores, may be reluctant to concentrate on stores because of the huge expense of building the physical and technological features that make them effective.
“Department stores are dead. They just haven’t been buried yet,” he said. “Is that format obsolete? No, I don’t think so. But it will require tremendous imagination and creativity for them to completely reinvent themselves.”
Wexner said he has proof-in-the-pudding evidence, in the form of growing sales, that the money spent to upgrade and grow Victoria’s Secret physical stores is paying off.
“This is a first in the world, this insight,” he said. “This is way bigger than the Internet, although it’s not as sexy — that you just remodel a 10-year store and lift its sales — but it should be. If you see a store that hasn’t changed in a decade, it’s probably dead on its [expletive].”