Thousands of retail stores closed across the country this year thanks to the “retail apocalypse:” a term used to describe the closing of traditionally popular brick and mortar stores thanks to the rise in ecommerce giants such as Amazon. However, reports of retail’s death have been greatly exaggerated.
In fact, retail sales in the first quarter of 2017 increased 4.1 percent from the same time in 2016. Excluding autos, food service and fuel, retail sales increased over $45 Billion in the quarter. So where does this misconception come from?
One theory: Industry experts assume that when a brick-and-mortar store closes, the demand for that brand’s products or services also ceases – but this isn’t the case. The demand is still there, they just simply shift to a competitor who can deliver the product faster and at a better rate.
Some sectors are in decline – including sporting goods, department stores, electronics, clothing, shoes and drug stores – simply because many of their leaders are too short-sighted to modernize their practices. Instead of reinventing themselves, these organizations are focusing on offering more sales and promotions, which is accomplishing little, and further devastating their bottom line.
In comparison, DIY, furniture, cosmetics, mass merchants/discount, jewelry and supercenters/warehouse clubs are tackling the Amazon effect head-on. Organizations in these sectors – as well as some forward-thinking leaders in other sectors – are doing the most to improve the consumer experience both in-store and online. For example, American Eagle offers Reserve Try and Buy: a newly instated option where consumers can shop online, reserve their chosen garments and try them on in-store to decrease time spent physically shopping. Companies like Nordstrom are also offering an improved consumer experience by opening smaller experience stores, not selling clothing, but beer and wine as well as offering customers their own personal stylists.
The most successful brands are also increasing their IT spend and leveraging the cloud to ensure their online operations and inventory are as up-to-date as possible. To stay aligned with the customer-centric theme, companies are also investing in mobile as consumers increasingly turn to their cell phones and tablets to shop on-the-go. Most organizations are investing more in retail technology to engage their consumers, speed operations and compete with their peers – and the ones who don’t are facing bankruptcy and store closures. New tech makes the stark contrast between thriving stores and declining stores more apparent.
Overall, as traditional brands such as JCPenney and RadioShack continue to close, organizations focused on the customer continue to thrive. Consumers aren’t flocking toward Amazon; they are enticed by brands that emphasize the shopping experience. They’re spending more – in even more stores – but expect more than occasional sales and promotions. Retail isn’t reeling, it’s transforming – and retailers that aren’t changing with the industry are the ones that are facing extinction in the New Retail Economy.
Retailers: Don’t let the ecommerce giants take over. Learn how to thrive in the era of Amazon.