Uniqlo had been eyeing the 30,000 square foot vacancy left by Brooks Brothers since last  summer.  This week the company announced plans to take over the space in the world’s most expensive retail district, paying “a record $300 million in rent over 15 years.” 

Uniqlo is Japan’s largest apparel retailer, popular amongst frugal fashionistas looking for affordable fashion.  However, affordable and Fifth Avenue have never gone together.   So what’s happening on Fifth Avenue? What does it mean for luxury and specialty retail?  Tiffany & Co. is holding with their iconic flagship store on the famed retail row, but another high-end retailer, Takashimiya Co., is closing their Fifth Avenue location in June.  Wall Street Journal ran a very telling article on the impact of Japan’s changing consumer tastes on their Ginza shopping district. So is Rodeo Drive next?

The term correction is being used to describe what’s happening in the financial markets, but it could also be applied to what’s happening in the retail environment. Brands, and their retail representatives, are taking a deep breath to examine who their customers are, who they are to the customer then who they need to be. That examination involves getting closer to the consumer and trying to determine their very specific needs and wants. Macy’s for example is taking a regional approach to connect with their customer — matching the product mix to the local lifestyle. Women in Pittsburgh will have a very different selection than women in Manhattan. The idea is to appeal to the customer’s actual way of life and provide products that are truly valuable.

Another approach emerging from this correction is appealing to the shoppers’ values. SunTrust is an example of a company pushing the values of honesty, integrity and service over great rates. Jayne O’Donnell of USAToday wrote an article this week about apparel retailers offering more modest clothing choices to appeal to the spartan inclinations of today’s tentative shopper. 

At the end of last year, Wall Street Journal heralded that bling is out…sensible is in. Even luxury goods manufacturers are evaluating shoppers’ values and making adjustments. Martin Lindstrom wrote a fascinating article on being offered a brown paper bag to carry his Hermes purchase out of the store.  Customers of the luxury retailer are forgoing the emblazoned shopping bag for fear of being identified as an ostentatious spender.

To quote Lindstrom, “Things have changed.” But could it just be a correction? Could the power be shifting back to the hands of the consumer to determine what they want, how they want it and forcing retailers and manufacturers to give it to them. Selling to the customer what they need and want versus what the marketer wants them to want.

Smith interviews a consumer who says that instead of their vacation trips to Copenhagen and Kenya, they will opt for something a little more low key like a facial or dance class at the local gym.  Most of America isn’t having to make this sort of trade down. Most people are deciding whether to stick with Froot Loops or switch to store brand Fruity Rings.  But the bigger point of the article is that people are, in fact, trading down at all income levels.

The article goes on to interview shoppers who are bringing their entertainment into the home and eliminating “theater, restaurants, and football games” in exchange for eating in with a glass of wine or bottle of beer. This is consistent with the Miller Zell Shopper Survey that showed 50% of shoppers are spending less over all categories but increasing spending in grocery by 62%. 68% of shoppers reported staying in versus eating out or going out for entertainment.

This is bad news for Broadway, but great for grocery if retailers and category managers heed the call.