After nearly a year of lockdowns, mandatory store closures and people working from home, it's becoming more difficult to envision what retail will look like when we finally get past the pandemic. Right now workout gear, yoga pants, hoodies and comfy tops are bestsellers. And shopping online is not just the channel of choice, for many, it's the only choice. The question on most of our minds is when will retail finally rebound? And what will consumers want to buy as life gets back to normal? “The consumer right now is very cautious. What we're seeing is that the business is headed in two different directions: the discounters and very low end stores are doing really quite well. And then at the top end of the spectrum, luxury continues to perform. However, with an eye towards vaccines coming out and post pandemic, I think that what we're going to see is a changing landscape,” said Tom Ott, Chief at Retail and Fashion Solutions, which provides strategic solutions for retail and fashion companies.Although e-commerce has been booming throughout the pandemic, physical retail is poised to rebound. “I think that you'll see that natural tendency to want to be with other human beings to have that interaction. At the top end, the customer wants that interaction from a stylist so they can understand why something costs so much.He expects that some e-commerce platforms will bridge the gap between online and offline by having stylists in the field who can meet with customers either at their homes, offices or online to give more individualized service.“As traffic starts to increase, you'll see a lot of small retailers or DTC brands that will look at either a pop up in one of the many vacant stores, or a new emerging form of a kiosk in a mall. You really could bring an e-commerce player to life and let customers experience the products,” he said.With the market so polarized between either very high end or mass market is there any room at all for mid-tier to return?Redefining the ‘Middle Market’“We’ve so many companies closing stores or going out of business. What's happened is that retail has become a vast 'sameness'. There's too much dependency on big brands.”When every store offers the same thing, the only differentiator becomes price or promotions. For department stores in particular, this lack of uniqueness has been lethal.“ Yesteryear, all of the major department stores around the world had a true merchant feeling with their stores. And they would go out and source the best product in the world that they could bring home. It wasn't just a flight to safety with these big designer brands. It was about discovery and finding something new, something that was different and that would cater to your particular audience. I think there's an opportunity to be in the middle with special unique brands that offer style, quality and value,” said Mr. Ott, who spent 24 years at Saks Fifth Avenue as SVP and GMM of Menswear, Gifts and Home.Can Department Stores Go Back to Move Forward?The lure of working with big brands was typically that they were able to accept chargebacks, provide advertising money and other services that smaller brands could not. Realistically, will existing department stores be able to go back to that winning formula, where stores provided a sort of a treasure trove for customers to find unique things that weren't available elsewhere?“Lately, even those big department store brands have really started to push back, and they're not paying all of the chargebacks; they're not providing all the advertising money. I've had conversations with some of these big brands that actually make more profit with the pure discounters than they do with the big department stores because they know what the price is and they don’t have losses,” said Mr. Ott.The Secret Sauce is in Sourcing“For the department stores, the key is in sourcing. From experience, the magic number is about 80% markup. If you can operate on 80% markup, it allows for your advertising, it allows for the markdowns that are going to be incurred, it allows for you to move on and clear the merchandise and move to the new season. It is possible, but you have to work at it. “You need to have a true merchant organization with boots on the ground all over the world to seek out the best sourcing for your product. For example, at Saks Fifth Avenue where I was most recently, we started our own private label program in men's . We started it from zero and in three years we grew it to be a $50 million business. It was our largest business. Our margin was at 50 points and we were able to do it successfully because we built an organization. We had specialists in the stores. Twice a year, we would take our group to Las Vegas, and we would browbeat them on features and benefits of the product so they could then communicate this to their clients. We had, arguably, the best quality and value that was on the selling floor,” said Mr. Ott.Building A Bestselling Private Label Menswear Business“We worked with agents throughout Europe sourcing our products. We also had great factories in Asia. And this was in 2018. So it can be done. Macy's merchandising Corp has a terrific reputation and just came out with an initiative to drive $5 billion worth of new private brand private label business through Macy's. JC Penney was just about to round the corner, before the pandemic hit.A Brand Balancing ActThe new retail strategy is neither a reliance on big national brands nor going all in on private label. It’s finding the right balance amongst private label, big brands and cultivating new or smaller brands.“A store should look at having about half of their assortment as private brands, whether those are house brands or exclusive brands that you work with in the marketplace.“When you’re buying the big brands, you want exclusive offerings within them,” he said.“Some of the businesses are headed by people that are more concentrated just on numbers, and so many positions have been eliminated in the buying offices. People are just scrambling to keep their head above the waves let alone thinking about exclusives. It’s paramount to work with small upcoming brands to do something that's special. Maybe 10-15% of your assortment are small emerging brands. I also believe that there is a responsibility of the big stores to help in developing small brands. A Smartening of MenswearThere’s a popular narrative in the industry that the migration to casual wear has put an end to formal menswear. But have we really seen the last of the suit and tie?“There was this whole casualization that’s been happening for the last two decades and a lot of people think that the suit is going to go the way of the top hat. “This huge casualization that's occurring, mostly because of the pandemic, it's not going to continue. My opinion is that if it comes down to a tie breaker, and somebody has to make a decision as to who they're going to invest money with or who they're going to hire for a job, I say odds are that it's typically going to be with the guy that put on a suit and a tie, as opposed to a concert t-shirt and a pair of jeans,” said Mr. Ott.“As we emerge from this pandemic, people are going to want to celebrate, again, and start to travel, and go to parties. And they’re going to look in their closest as it will be a sea of sweat suits. So they're going to need to buy something that's new and different. “One thing is for sure is the people will want comfort. But I think you're going to see color, like you've never seen it before.”What a Man Wants“In menswear you're going to see the reemergence of the sport coat. It's a way for a guy to have some individual expression. Also, a guy needs a place to put his phone, his keys and his wallet so a coat becomes almost a necessity. “So I think that you're going to see a little bit of what I would call ‘smartness’ in a way that a guy is going to dress. He's going to want to be a little bit cleaned up, he's going to want to wear a little bit of color. He's going to want to have something that's comfortable, but he's going to want to make an impression. “I think silhouettes will be a little bit closer to the body. They’ll be a bit cleaned up. The jogger will come back and there will be a reemergence in denim. I think that denim really took a little hiatus during the pandemic. Like with coats, jeans have pockets and that’s important.“At the same time, I think footwear is an area of really a lot of change and a lot of interest. The whole sneaker phenomenon is on fire. Designers sneakers are amongst the best trending areas in the stores right now. You're going to see a push towards loafers drivers. And what's really making big inroads is hybrids - that kind of hiker sneaker look. I think you'll see that really explode as we go into the summer. next fall,” said Mr. Ott.The Next Big ThingIn a hyper competitive market, success is often being able to stay ahead of the market. Thus the ongoing challenge to identify the ‘next big thing’ or the bestselling ‘item’.“I think it's about finding the items that will really drive business and we really haven't seen that in a long time, even pre pandemic. If you look back to Giorgio Armani and American Gigolo, then you had to go out and buy Armani. “My sense is that something really is going to come out of this pandemic that's going to be quite exciting in fashion. If you look back on the timeline at periods where there was strife, it drove creative, genius. Probably the last time was in the late 60s in the United States. Look at all the music that came out of that time period, with the Beatles and so many other young, creative people.“What's exciting is if you continue to push forward and develop new products, even during the pandemic, my sense is the payback could be generational, that's how much business I think is going to come back. I think it's going to be raging,” said Mr. Ott.