Everywhere you look, you see stories about how retail is dead, dying, and done. The Atlantic even ran a story about The Great Retail Apocalypse of 2017.
Yet despite a rash of store closures and bankruptcies among some of America’s largest retail brands, the article notes that retail sales growth continues its slow, steady climb.
So is retail really dead? Dying? Done? Or is it growing and thriving?
In this article, we’ll review the retail industry’s health and see what the experts have to say.
The State of the Economy
Our nation’s economy – and the role of your customers in it – is perhaps the biggest factor in the growth or decline of retail.
And there’s good news on that front: according to a Kiplinger mid-year report, GDP is trending up at a 2.1% pace for 2017 and retail sales are growing by 3.5%. It’s important to note, however, that this sales growth breaks down to a 15% increase in e-commerce sales and just 2% growth in-store. So while even in-store sales are seeing growth, the clear opportunity is in e-commerce.
Tomorrow’s retail industry leaders will be those with strategies to capture both the in-store and e-commerce growth patterns.
The Power of Disruption
In his opening remarks to the National Retail Federation’s The BIG Show, NRF president Matthew Shay discussed the positive impacts of disruption. First there was the political disruption in Washington, D.C. and how it could benefit the retail industry as a whole in areas such as regulations, taxes, healthcare, and employment. According to Shay, however, the politics “pales in comparison to the ongoing disruption in retail brought about by rapidly changing technologies and consumer preferences. Your customers will never see many of these technological advances and innovative solutions. But they’re as essential to your success as marketing and inventory.”
Deloitte’s Retail, Wholesale, and Distribution Industry Outlook for 2017 echoes this sentiment with their theme of “disruption as the new normal.” They showcased how rapidly shifting technologies are leading to a whole new paradigm for retailers wanting to win competitive advantage: “fail fast, learn quickly, move forward and succeed early by delivering minimum viable products. Established players may be at greater risk of losing market share to retail disruptors who are held to different standards and are better able to exploit organizational and operational agility.”
The Weight of Too Many Stores
Some would say the problems faced by brick-and-mortar stores are the result of too many locations rather than too few customers.
The Atlantic article also cites research from Cowen and Company showing that shopping center space per capita in the U.S. is more than five times what it is in the U.K. – the highest of any European country.
CNN Money quoted Urban Outfitters CEO Richard Hayne on the store closure trend, “Our industry, not unlike the housing industry, saw too much square footage capacity added in the 1990s and early 2000s. Thousands of new doors opened and rents soared. This created a bubble, and like housing, that bubble has now burst. We are now seeing the results: doors shuttering and rents retreating.”
Retailers who are nimble enough to maneuver through this landscape, negotiate better leases, and plan their expansions wisely will have more opportunities to thrive in 2017 and beyond.
The Convergence of Stores and E-commerce
Convergence is one of retail’s biggest buzzwords right now. According to Forrester, “The physical and digital worlds are converging and with it so are your channels. Retail is at the epicentre of disruption.” That’s right – more disruption. They go on to illustrate their point with a vision of interactive videos extending e-commerce into endless store aisles, mobile apps guiding customers as they browse, and even connected coffee machines automatically reordering your drinks.
Vend’s 2017 Retail Trends and Predictions highlight several of these convergence themes, too. Among them are:
- Providing unique in-store experiences
- Adopting mobile payment solutions
- Incorporating apps, services, and third party vendors to enhance the customer experience
- Investing in omnichannel sales and distribution
- Analyzing data for more customization and personalization in-store and online
In regard to personalization, TimeTrade’s State of Retail 2017 report suggests that retailers left more than $150 billion on the table last year by lagging behind on personalizing their services.
At BigCommerce, they describe the goal of omnichannel solutions as solving the “what customers really want” problem. In this way, omnichannel customer experiences aim to transcend any one medium by simply providing shoppers what they want, when they want it.
And these are just two examples of how today’s retailers can benefit from convergence and achieve an advantage with technology.
The Imperative of Change
In conclusion, it should be clear that retail is not dead or even dying. It is thriving in ways the industry has simply not seen before.
Opportunities abound, both in-store and online, to capture that growth (and to acquire the market shares of those who fail to adapt quickly enough). As Deloitte summarizes: “Retailers can anticipate confident spending throughout 2017, but expect unprecedented competition.”
This competition comes from giant retail chains, social media savvy sole proprietors, and online juggernauts. The one thing all your serious competition has in common? They’re embracing change.
Amazon.com is not satisfied with their total disruption of the retail industry. They’re buying Whole Foods and opening their own innovative brick-and-mortar stores. Walmart is not content with 4,672 stores nationwide and a reputation for the lowest prices. They’ve implemented an Amazon-esque marketplace for third party vendors on their website.
If these two massively successful retailers acknowledge the need for change, so can you. The future is bright in retail, if you understand that customer purchasing behaviors are changing. You can make the most of those changes by adopting new business processes and the technologies required to support them.
At DecisionPoint, we can help you provide the customer experiences people want. We can revolutionize your inventory systems and warehousing, we can implement mobile shopping and payments, we can set up your omnichannel sales, marketing, and distribution. Contact us today and we’ll show you how good 2017 could really be.