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Monday, January 23, 2017 - 11:01am

Eugene Fram says legacy stores such as Macy's, J.C. Penney and Costco will survive the current retail turmoil.

"All three have strong regional brand recognition and have the greatest potential to be sustainable," said Fram, emeritus professor of marketing at Rochester Institute of Technology's Saunders College of Business. "The current retail upheaval is the last hurrah for what I call the 'Battle of the Retail Giants.'"

Fram said the U.S. has become "overstored" for the needs of the population during the last 20-plus years-currently with about 25 square feet of mall space per capita. This is far above the data of other developed countries. Consequently, retailers such as Macy's, J.C. Penney and Costco are making critical decisions to evaluate locations that best fit the needs of a changing clientele that is shopping more over the web, buying less clothing and comparing store prices with online prices.

"Although prompted by increased fee charges, Costco in 2016 also made a smart move when the company changed from American Express to Visa," Fram said. "It works far better for its segment of the retail population."

In 2009, Fram predicted the downward spiral of the 21st Century Store, which also affects manufacturing, service and wholesale channels. He said the trend began as early as 1990 as large well-financed and well-managed retail organizations fought for the market share-resulting in the merger or acquisition of some, closure of weaker ones, and many Chapter 11 bankruptcies.

"In 2015 and 2016, these actions seem to have moved on steroids," Fram said. "McKinsey and Company reports that 'Analysis of big data has helped larger retailers to better understand the rapid changes in their target customers.'"

According to Fram, analysis of big data has helped larger retailers to better understand the rapid changes in their target customers. With the growth of artificial intelligence, successful retailers will be even more data driven, much like Amazon-but the fact remains that with huge percentage year-to-year gains in recent years, only about 10 percent of total retail sales are online.

"Some legacy retailers will survive and prosper in a diminished format," said Fram. "Evidently there is a substantial portion of customers who demand to see, feel and smell the merchandise."

Fram was "born and raised" in the retail environment. Before his 51-year stint in teaching marketing at RIT, the emeritus professor worked as an assistant research director for the Associated Merchandising Corp (the AMC is now owned by Target) and holds a master's degree in retailing from the University of Pittsburgh.

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