Unless you’ve been hiding under a rock, you’re probably aware of the rapid changes in the commerce landscape. So far in 2017 store closing announcements have increased 97% year-over-year. Malls are emptying, brands are going bankrupt, and retail workers are losing their jobs by the million. This is all thanks to the proliferation of eCommerce.
Does this spell the death of traditional physical retail?
Before jumping to any conclusions, check out these recent hot takes from the experts on the rise of online shopping, and the move away from in-store purchasing.
TL;DR – This isn’t the end of traditional retail, this is the beginning of a new way to sell and distribute goods/services. Retailers need to adapt to this change by making it easy for consumers to buy between stores to stay competitive!
The New York Times covered the mass closure of American retail stores recently, emphasising the staggering number of locations closing and jobs being lost across the country. They even jabbed at Trump’s campaign hot topic the coal mining industry, pointing out that 89,000 American general merchandise workers have been laid off since October – that’s more than all of the workers that the U.S. Coal Mining Industry employs! Despite the fact that retail has always had its dips, it’s now becoming clear that traditional retail may never recover. Gone are the glory days of fabulous department stores or malls that you can fit a baseball stadium into. A permanent restructuring needs to take place, to help companies and people survive in the modern-day retail environment. All hope should not be lost though, as the NYT points out: even eCommerce giants like Amazon are experimenting in the physical retail space.
The Economist’s Till and Skills focuses on the changing workforce, as a result of the shift to online shopping. Offline only retailers are hurting, but the rise of eCommerce is also hurting retail’s workers as well. According to the Eurasia Group, an estimated 192 million retail jobs around the world can be automated, furthermore it isn’t that easy to move low skill-set store workers into the world of eCommerce or logistics. The Economist asserts that policymakers need to step-up in order to help ease the the transition of millions of retail workers, and recognize the impact of technology on jobs.
Investing blog The Motley Fool points out that in Canada specifically retail sales are set to explode. The expected increase of 40% between now and 2019 illustrates the uptake of eCommerce sales. This is signaling an industry wide transformation, that online is a sales channel for retailers to embrace, not fight against. Businesses across Canada are losing their market share, with only 13% selling online currently. There are well-defined commerce solutions that exist that retailers can leverage to operate efficiently, and with lowered costs.
It’s not just retailers taking a hit right now, there’s other industries feeling the effects of dropping mall traffic. Business Insider points out that soda-giants like Coca-Cola are being greatly impacted too by the huge change in consumer behaviour. The less people visit malls or department stores, the less they’ll be picking up a soda in store or at a vending machine, forcing Coca Cola to innovate as well. So far in 2017, retailers like JCPenny and Sears have announced more than 3,200 store closures, creating a shockwave effect for the chain restaurants like Chilli’s that are located around malls to serve hungry shoppers.
Fashion-lifestyle blog Refinery29 have a refreshingly different take on the rise of online shopping. They recently posted about the disappearance of shopping montages in movies or on tv. A good shopping montage was once a go to film convention, but now we rarely see these quick cuts because the way we shop has changed forever! Refinery29 point out that just over 10 years ago in 2006, 94% of malls were considered “healthy”, in 2015 that number dropped to 80%. People aren’t shopping like they use to, and shopping in general has stagnated. Consumers are either weary to spend, or heading online for some retail therapy.
Salvatore Iacono, Executive VP of Operations at Cadillac Fairview a company that owns some of North America’s biggest retail properties, has a positive outlook on the current disruption in retail. Iacono asserts that his malls are still seeing a lot of traffic, even as consumer start to embrace online shopping more. He says that this owed to understanding what exactly shoppers want, providing them with a high-end retail experience to meet their needs, and services they can’t find online. Iacono knows that he’s talking about it seems, the Toronto Eaton Centre is one of the busiest malls in North America, attracting 50+ million shoppers a year.
Bruce Flatt, CEO of Brookfield Asset Management, spoke recently to Forbes about the exaggerated death of the american mall. Flatt mentioned how eCommerce giants like Amazon had in fact been opening physical stores. He believes that “the future of retail lies in the integration of online with brick and mortar retail” and asserts that “Change presents opportunity for those that have the vision, capital, and skills to be able to capitalize on the market change”. We of course wholeheartedly agree with Flatt’s statement