Since the early 2000’s industry forecasters have long held that the future of retail is nothing short of grim. Recently, the media has devoted its fair share of ink to stories citing the mounting pressure on retailers to come to terms with the “over-supply” of their brick-and-mortar locations, calling the situation nothing more than a “retail apocalypse.” While it’s inarguable that store closings are indeed happening, let’s take a moment to put this “grim” outlook into perspective.
During the pre-recession economic boom, retailers “over-built” as part of a massive rise in commercial retail development. According to a March article published in Business Insider, the United States has 23.5 square feet of retail space per person, compared with 16.4 square feet in Canada and 11.1 square feet in Australia, the next two countries with the most retail space per capita, according to a Morningstar Credit Ratings report from October 2016. If this fact is true, then perhaps recent store closings are a delayed, yet necessary, post-recession restoration of the balance of the retail landscape versus a black-and-white indicator of whether in-store shopping altogether is soon to be killed off by “sofa surfing.”
Interestingly, some industry reports point to the reality that retail sales today are alive and well. An April 2017 Kiplinger report forecasts that retail sales growth (excluding gasoline) will outperform last year’s growth rate, tracking at 4.7% versus the 2016 growth rate of 3.8%. As in any stock market valuation, growth is positive, stagnancy or decline is not.
A recent article published by Celect, a leading analytics platform utilized by global retailers, cites that a PriceWaterhouseCoopers study concluded that consumers are looking for what they call the “Total Retail” experience. In other words, they want a fully integrated relationship with their go-to brands – online, mobile and in-store. “To deliver, retailers (must) utilize omni-channel data to make informed decisions about the product SKUs, brands, and levels to stock in particular stores, make use of in-store analytics tools to track how customers shop and provide compelling promotions, online and off, to get customers interested in their wares.”
In other words folks, Amazon is not taking over the world – Big Data is.
Add to the consumer’s desire for the “Total Retail” experience the reality that today’s downtown cityscapes are rapidly being revitalized as part of a burgeoning trend in new urbanism (return to downtown living). In this case, it’s easy to see how residential patterns alone are directly influencing the need for retailers to reinvent the delivery of product to the buyer.
Take a moment to read here how big box retailer, Walmart, is buying its way toward making online, on-demand shopping a local affair. The Walmart acquisitions are only a handful of cases in which we see mass chain retailers inserting themselves directly into the e-commerce space, while engineering hybrid models that offer shoppers a variety of purchase, pickup and/or delivery options. In my view, these case scenarios suggest a blooming interdependence between the two traditional entities of retail and online. Indeed, the future success of each may actually lie in the hands of the other.