Reasons for today’s retail meltdown
We’re hearing it everywhere: “Retail Apocalypse!” Declining brick-and-mortar sales, cutthroat competition, increasing expectations and an ever-changing customer base – the ingredients for a toxic recipe that is sending major retailers to their death bed.
The traditional brick-and-mortar store approach isn’t just leaving the party—it’s already left the building.
1. People are buying more stuff online than they used to.
There are four main reasons why consumers are more motivated to shop online vs in-store: the prices are cheaper, free shipping is offered, there’s 24/7 access and a larger item selection. The value of convenience and choice is on the rise, so retailers must activate experiences that reinforce these elements for optimal conversion. Many are just beginning to scratch the surface.
2. There are too many malls.
According to NRF’s Stores Magazine, a 2016 report by Green Street Advisors said that department stores need to close as many as 800 more locations to return to the levels of productivity seen 10 years ago – equaling nearly one-fifth of all anchor space in U.S. malls. Too much space, combined with rival centers close to proximity, has increased competition in the retail market. Additionally, today’s rapid changes in technology have changed the way consumer shop and engage in entertainment. Gone are the days when youngsters would meet up at the mall to hang out.
Which takes us to the third reason.
3. Brick-and-mortar stores haven't adapted for new generations.
Wendy Liebmann, CEO at WSL Strategic Retail says, “These [brick-and-mortar] stores have been around for a long time. That doesn’t mean they can’t be modernized. But … they have not changed dramatically from the place you would have shopped 10 years ago. They are not speaking to a younger generation in their innovation, their social and community engagement, or in the way that this generation expects their products to be presented.” When was the last time you saw a bricks-and-mortar store completely innovated with the latest technology trends? Sure, some are making valiant efforts with kiosks, mobile alerts and other omnichannel capabilities, but the perfect customer experience isn’t completely there yet.
With the omnichannel “customer experience” disrupting the supply chain, retailers are being forced to put time and effort into e-commerce. Retailers must now have consistency across all touchpoints, with the ability to move fluidly between in-store, online and mobile. Too often, retailers still separate their digital and physical presence, and today’s consumer doesn’t understand that notion.
This is why many consumers are turning online, and specifically to online marketplaces, in search of their items and in tandem with the perfect customer experience. In fact, 59% of U.S. consumers say they begin their online shopping searches on Amazon, ahead of Google. In the U.S., Amazon dominates the online retail space and the same goes for Alibaba in China. What we’re finding is that in order to survive 2017’s retail Armageddon, retail needs to compete on the same level as these e-commerce marketplaces.
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Optimizing the Customer Experience in 2017.