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What's Eating Columbus, Ohio?

Columbus, Ohio has the country’s highest concentration of fashion designers after New York and Los Angeles. Now, a retail revolution is threatening its beloved mall brands and the idyllic lifestyle they sustain.
Illustration: Mike Lemanski
By
  • Lauren Sherman

COLUMBUS, United States — "The Stepford Wives." During a brisk 24-hour trip to Columbus, Ohio, not one, not two, but three different people mention the 1972 novel in which author Ira Levin satirises the Connecticut suburbs, depicting its frigid, perfectly turned out housewives as robots built by their scheming husbands.

Robot-wives aside, the Columbus suburbs do often veer towards Stepford territory, if only in appearances. There’s Easton, home to the city’s toniest indoor- outdoor mall complex, the Easton Town Center, developed by L Brands chief executive (and Ohio’s richest man) Les Wexner. And then there’s New Albany, where Wexner — whose net worth is currently close to $6 billion — owns a 30-room mansion that sits on more than 300 acres of land. Both neighbourhoods, located north of downtown and just minutes from the airport, are populated with actual white-picket fences and freshly cut grass lawns, as well as the campuses of some of America’s biggest “mall brands.”

Around 2,200 employees work at Abercrombie & Fitch’s New Albany headquarters. Just a five-minute drive away from Easton Town Center is the headquarters of Wexner’s L Brands on 3 Limited Parkway, which is itself exactly a minute away from 1 Express Drive, both named after brands Wexner started himself but no longer owns. (In 2013, L Brands sold its remaining stake of The Limited to private equity firm Sun Capital Partners, Inc. In 2011, it sold its remaining ownership of Express, which is now a publicly traded company.)

The Limited, perhaps best known for popularising stirrup pants among American suburban mall shoppers in the late 1980s, is no longer. At the beginning of 2017, Sun Capital Partners announced it would close its remaining 250 stores. But Victoria’s Secret, Bath & Body Works and Henri Bendel are still owned by L Brands and still occupy 3 Limited Parkway. Drive just a little further into Easton and there’s plus-size leader Lane Bryant and tween concept Justice, two former Wexner properties now owned by Ascena brands.

The common thread here is Wexner, the unofficial king of Columbus, whose disproportionate stake in the business of American shopping malls helped to define specialty apparel retail — and hence the way average Americans dressed around the country — for more than 30 years. He even owned Abercrombie & Fitch until the brand was spun off and went public in 1996.

Abercrombie & Fitch Campus, Ohio | Photo: ANF Corp

Wexner’s employees have also helped to define the culture of Columbus, which is a world apart from the nearby Rust Belt, the region of the US most affected by de-industrialisation. Detroit, Pittsburgh, Buffalo, Cincinnati, Cleveland: these are all cities where blue-collar manufacturing long reigned and that have been deeply injured and debilitated by its disappearance.

In contrast, the Columbus metropolitan area is predominantly white collar, with a major public university — Ohio State — supporting its backbone and a gross domestic product of $124 billion in 2015, according to the US Bureau of Economic Analysis. Chase Bank has been headquartered here since its merger with Bank One in 2004. Nationwide Insurance, Cardinal Health, Wendy’s and American Electric Power are also here.

Even as cities like Flint and Detroit, Michigan, began hurting as automobile manufacturing jobs moved overseas, Japanese car brand Honda opened a manufacturing plant in Marysville, Ohio, in 1982. By 2015, the company employed nearly 14,000 workers in Ohio, many of whom are just an hour north of Columbus in East Liberty and Raymond, where there is a plant and research and development facilities, respectively.

The city’s diversified economy helped it come out of the Great Recession relatively unscathed, while its mix of residents — from Honda’s Japanese managers to retail executives to university students, researchers and staff — has nudged along the city’s cultural offerings, from art to food to retail. Columbus' fashion and retail companies employ more than 8,000 people and it claims to house the third-highest concentration of fashion designers in the US, after New York and Los Angeles.

“When you think about our retail sector and the diversity of the people that operate in the retail sector, that brings thousands of people in that industry into our community that would have never lived here,” says Kenny McDonald, president of Columbus 2020, the economic development organisation for the region’s 11 counties. “It’s a common reaction for consultants passing through to say, ‘I can see why you’re here.’ It’s not a logistics location.”

For the city’s creative transplants, the minimal traffic, strong public school system and relatively easy access to major metropolitan cities including New York (a one-hour-and-15-minute flight), Chicago (a five-hour drive) and Los Angeles (a four-hour flight) makes Columbus an appealing alternative to the chaotic nature of a major metropolis.

The retail world pulls people from New York, from LA, from these coastal fashion destinations into Columbus.

"When I was living in New York, everything was frenetic, even getting to work was stressful for me," says Aaron Levine, who left a cushy job at the Ralph Lauren-owned Club Monaco in 2015 to lead men's creative at Abercrombie & Fitch. Levine, who was commuting from upstate New York to Manhattan for Club Monaco, uprooted his wife and twin daughters to make a go of it in Columbus. "I was getting to a point where I was really high anxiety. The stress level at work is still high, but the quality of life is mellow. My round trip commute is 40 minutes, backroads, by some cows. I have a pickup truck."

Brian Beitler, who joined Lane Bryant as chief marketing officer in October 2014, did the same, although this was his second stint in the city. (The first was from 2005 to 2007, when he was VP of marketing at Bath & Body Works.) “The retail world pulls people from New York, from LA, from these coastal fashion destinations — both domestic and global — into Columbus,” he says. “They have taste levels and expectations for art and culture and food. These people expected vibrant food scenes and, so, they developed.”

The evenness of the city — culturally mixed, politically diverse — has also made it a favourite testing ground for new retail concepts. “If it works in Columbus, it’s broadly a concept that can work in other parts of the country. If it didn’t work in Columbus and you tried to take it elsewhere, it wouldn’t work either,” Beitler adds. “That’s been an advantage for the retailers that are based here. Columbus has developed as this little microcosm of the country. It’s not just retailers or the food industry, it’s political parties that have realised that as well.”

But while Columbus’ idyllic mix of suburban comfort and college-town culture may appeal to executives seeking another kind of life, the city is bracing itself for a different sort of revolution: a retail revolution that is rocking the foundations of the American fashion industry.

“While we’re a diverse economy, we have a big chunk of this... what used to be your mall, which is now whatever it is online, or a combination of both,” McDonald says. “The industry is going through a period now where I think there are more business model changes than maybe you’ve had in the past. It’s not just fashion choices, it’s literal business models. We keep asking ourselves, ‘How can we make that stronger? How can we continue to be not only thought leaders, but execution leaders?’”

One of Wexner’s greatest skills is his ability to fling off brands. He acquires them, whips them into shape and sells them (or pushes them to IPO) before they are cause for concern. But he almost exclusively deals in specialty retail, or single brand stores that cater to a certain demographic, whether that meant making sexy lingerie accessible at Victoria’s Secret or outfitting several generations of teens in Abercrombie & Fitch.

Victoria Secret store, Denver | Photo: Shutterstock

But specialty retailers from The Limited to Gap have suffered over the past decade, thanks to the rise of "cheap chic" fast fashion giants and the growth of e-commerce, which made a trip to the typical suburban mall, where most of these retailers leased stores, unnecessary.

Today, nearly all of Columbus’ major apparel brands are struggling. Abercrombie & Fitch, which saw annual revenues drop by about a billion dollars between 2013 and 2016, eliminated 150 jobs at its headquarters in January.

That same month, Sun Capital announced the end of The Limited. Victoria’s Secret, long the dominant player in the American women’s underwear market, has not managed to adapt quickly enough to the changing tastes of consumers — who are abandoning the brand’s bread-and-butter underwire and push-up bras in droves for comfort cotton — with comparable store sales down 16 percent year-over-year in February 2017.

Express saw fiscal year 2016 net sales drop 7 percent year-over-year to $2.2 billion, and fourth quarter net sales decrease by 11 percent to $679 million. Net sales were up 3 percent to $1.1 billion at Ascena’s Lane Bryant in its 2016 fiscal year — thanks to its standing in the underserved plus-size market, as well as its tendency to be located in outdoor shopping centres instead of dead indoor malls — but down 13 percent to $1.1 billion at tween chain Justice.

Shifting consumer spending has already resulted in job losses at some of the area’s apparel companies, but if the trend continues, the ripple effect in Columbus could be significant. At the Columbus 2020 offices in a quiet, office building-filled area of the city near the Scioto River, McDonald lays out a centerfold-size sheet detailing the city’s “retail innovation ecosystem,” which shows which retail companies are headquartered there (DSW shoe warehouse, L Brands and A&F, etc.) alongside those with satellite offices in the city (Ascena, JC Penney) and call centres (Gap, BMW).

Perhaps more tellingly, it also lists the dozens of companies who form the ecosystem that sprung up to serve Columbus’ major retailers. Seven store design agencies. Eight retail installation agencies. Twelve branding, marketing and advertising agencies. Not to mention the more than 40 distribution and fulfillment centres (from Eddie Bauer to Luxottica), eight logistics companies and dozens of information technology firms, dealing in everything from point-of-sale to supply chain, analytics and online sales and marketing. Alliance Data Retail Services, which makes private-label credit cards for retailers, was borne out of the merger of J. C. Penney and The Limited’s credit card operations.

If Columbus’ top retailers continue to suffer, won’t these businesses suffer as well? The attitude of regional officials is that whether or not the actual brands survive, the needs for these services — from new retailers that emerge in the area or elsewhere — will remain. “From an economic development standpoint, we may look at it a little differently and say, ‘The stronger we can make the support of the industry, the better,’” McDonald says.

But even if the area’s distribution centres and technology firms increasingly service apparel companies and other retailers with headquarters outside of Columbus, it’s not like those firms aren’t having trouble as well. After all, the troubles in Columbus are symptomatic of the American retail industry as a whole.

Columbus has developed as this little microcosm of the country.

“There needs to be a change of thinking,” says Joseph Licata, founder and principal of Licata Creative Group, an agency with clients in retail, fashion and consumer-packaged goods with offices in both Columbus and New York. “When an entire brand closes, people worry about the state of things in Columbus. For instance, the housing market certainly shifts depending on retail. But I’m not so sure that people are worried about losing their jobs.”

At least not yet. “I don’t think the [philosophy] that has driven these companies [in the past] will take them to the next phase of growth,” Licata explains. “A lot of this legacy leadership tends to look backwards. They say, ‘We were really amazing in 2006 and 2007,’ as opposed to, ‘What does the future of our brand company look like?’ I worry that innovation is slowing and the appetite for risk isn’t there.”

Indeed, the biggest criticism is that there is little risk taking at these firms, or at least none that can be detected by the products they are creating or the retail environments they are offering. Part of the problem is binding long-term leases that keep retailers tied to undesirable shopping centres. But another is lack of innovation. Many of these companies are too large to take the sort of big leaps they would need to to challenge their disruptors. The Limited is gone, but who will be next?

One glimmer of hope is at Abercrombie & Fitch, where Levine was promoted to head designer in December 2016 and well-regarded chief merchandiser Fran Horowitz was made chief executive earlier this year. The moves gave shareholders and industry insiders hope that the company was finally out of the grip of longtime chief Mike Jeffries, whose questionable HR policies and crude public comments left a bad taste in the consumer’s mouth.

Levine came up in menswear, but his aptitude for the brand gave Horowitz the confidence that he could take the beloved, if battered, brand forward across both men’s and women’s collections. Levine’s men’s collections have been a hit with editors, but his decidedly adult take on brand classics like cargo-pocket trousers and button downs have not aligned with the rest of the brand’s output, including its creative and its women’s offering, which has continued to chase the teen market. With new store concepts rolling out and a marketing refresh underway, new women’s collections are set to debut in stores in the autumn of 2017.

But while Abercrombie & Fitch is making a play for a revival, what Columbus — and the entire specialty retail sector at large — really needs to do is take a page out of Wexner’s original playbook and innovate, abandoning dead-in-the-water brands along the way. A few new retail concepts emerging in the city, including Samson, a multi-brand menswear store that caries a mix of rugged indie labels, and One Six Five, a well-priced, clean-lined collection of jewellery designed by locals Kaleigh Shrigley and Claire Lowe.

“I do think we have to take the mentality that brands will come and go,” McDonald says. “Brands will succeed and fail, or go up and down at least.” Whether or not Columbus will be a part of that next wave remains to be seen.

This article appears in BoF's latest special print edition: "America."

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