As consumers increasingly rely on online platforms and e-commerce stores, visit malls less, and adopt new shopping patterns, traditional retailers are taking a hit. However, the same trend that is undermining businesses can also provide greater sales opportunities not limited by geography or opening hours. Retail digitization and innovation can become a competitive advantage that will allow malls and the stores within them to survive the retail apocalypse. Read on to learn more:
In this article:
What is the retail apocalypse?
What is causing it
How you can survive it
What Is the Retail Apocalypse?
The retail apocalypse is a dramatic trend causing retail businesses in the US to close stores, downsize operations, or shut down completely. According to CoreSight Research, retailers in the US closed 5,994 stores by April 2019 - more than all the stores shut down in 2018.
Major retail brands filed for bankruptcy in 2019, including Diesel, Charlotte Russe, Fullbeauty Brands, Payless, and Things Remembered. These brands join an already-long list of globally famous brands that shut down operations in the past few years.
In addition, research firm Thasos says that foot traffic is dropping at malls across the United States since August 2018. Its data is based on tracking of consumer movements via more than 100 million mobile phones. This and other data indicate that the traditional shopping center is declining as a preferred destination for shopping, entertainment, or just hanging out.
What Is Causing the Retail Apocalypse?
There are many reasons for the current retail situation, some economic, some commercial, and some cultural or technological.
Competition from e-commerce
According to the Federal Reserve Bank of St. Louis, 10.2% of retail sales in the US was made online. 80% of American households are paying subscribers of Amazon Prime. The convenience of e-commerce, the ability to select almost any product, better and cheaper delivery options, and a natural preference of millennials who are the first “digital first” generation, are all acting to reduce consumer visits to physical stores.
Failure to adapt to new shopping trends
Digital-first consumers, even when not shopping online, have different shopping patterns than the consumer of past generation. Today’s consumers seek a satisfying, meaningful experience when visiting a store, and look for a physical retail experience that conveys values and content they connect to. They also shy away from sales staff and obvious promotion, preferring in-store experts who can benefit them with their experience and knowledge. Many retailers have retained the old store formats and staff structure, and as a result are no longer drawing consumers to their brick-and-mortar stores.
The decline of malls
Route planning can be complex. Delivery businesses need to share loads across their Between 1970 and 2015, the number of US malls grew twice as fast as the population, indicating a high saturation of retail locations. Many believe that the fall of malls as a shopping destination was inevitable. According to Reis, the vacancy rate of malls in mid-2019 was 9.3%, the lowest since 2011. Another factor affecting shopping malls is the Great Recession, which caused many consumers to shop at lower-cost stores like Walmart, not located in shopping malls.
The massive closure of stores in the first quarter of 2019 could also be due to financial results, announced when financial year 2018 closed and the results of the holiday shopping season reported. Many retail chains may have announced store closings as a tactical move, to reassure investors and creditors that they are acting responsibly in light of slow sales in the past year.
How Your Store Can Survive the Retail Apocalypse
Here are some practical ideas you can use to make your retail store more attractive to the new digital consumer.
Leverage technology to enhance the shopping experience
Successful retailers are using technology to make the in-store shopping experience more appealing. Examples include apps customers can use to find or pre-order products, technology-based communication with retail staff, and engaging in-store displays. Of course, stores should also have a compelling online presence and provide an easy option to buy their products online.
Focus on a niche
In today’s commercial environment, all-in-one-place department stores are not a relevant option for consumers, while stores specializing in a specific type of product or equipment can be very valuable. A specialist store allows consumers to explore additional products they may not be familiar with, while benefiting from the expert knowledge of retail staff. Focusing on a niche your brand is strongly connected to can differentiate your store and make it an attractive destination.
Finding new uses of brick-and-mortar stores
If you are seeing less foot traffic to your store, use the physical space to do more than just display products. Create experiential activities that are fun for consumers and create a stronger connection with your brand. Make your store a place to hang out in—a classic example is bookstores that turned themselves into coffee shops where customers can relax and read.
Identify the best size for your retail operation
Consider if the current size of stores is appropriate for your business in the current situation. Can you streamline the shopping experience, reduce irrelevant products or stocks, and generate the same revenue with a smaller physical presence? Think about how to optimize your store layout, product placements, and staff to maximize the return on investment of every square meter.
Use automation to reduce costs
With modern technology like self-service checkout and RFID product tagging, you can improve the shopping experience, reduce unnecessary processes, and save floor space. You can also focus your payroll on expert salespersons that can really help consumers and get them engaged, as opposed to roles that perform purely administrative functions.
Adopt innovative mobility services
Adding smart transportation services to your website, in the form of a mobility widget that lets consumers book a ride directly to the store and back, can encourage higher visitation. This can be especially effective when combined with attractive in-store events or activities, with a button to get a ride to the event. In addition, individual stores or malls can provide a self-service mobility kiosk, or a concierge service provided by store staff to help consumers book a ride back home.