Retail Apocalypse
July 30, 2020 |
Sears. Zellers. Toys “R” Us. RadioShack. Forever 21. PaylessShoeSource. Gap.
There’s a growing list of brick and mortar retail stores that have reduced their footprint or filed for bankruptcy. Brands began rapidly disappearing from malls and re-surfacing in museums.
Let that sink in.
Coined as “The Retail Apocalypse” the prophetic demise of retail has accelerated in the past decade with the advent of the Great Recession, e-commerce, changing consumer behaviours, and the final nail in the coffin COVID-19.
Dead Malls
Post-World War 2 introduced the shopping mall concept. A concept at the time catered to middle-class suburban consumers. Large retail shopping malls were driven by big box stores commonly known as “anchors” and supported by chain stores that benefited from the foot traffic.
The boom in the largest economic expansion in modern times contributed to the boon of the shopping mall. Sustained growth peaked and the shrinking middle class had less of an appetite for the shopping mall. Shopping malls were not equipped to be retrofitted from their “anchor” store model and pivot away from charging large leases for retail spaces. The domino effect accelerated the decline of the chain stores reliant of the big box stores.
Rise Of Ecommerce
Amazon’s value peaked at a trillion dollars1 and Shopify peaked over $121 billion dollars2. These are examples of two of the forward-thinking companies that emerged from the dot-com bubble of the early 2000s. Many companies didn’t turn a profit, yet Amazon and Shopify remained persistent in their approach in focusing on the growing demand in online shopping.
Online shopping has greatly allowed for much more consumer comparison shopping on the internet. It has also enabled SMBs to scale and compete against corporate enterprises without the burden of retail overhead costs. The online shopping experience has also unlocked much valuable insight into marketing data never seen before.
A Place For Both
“Amazon is not too big to fail,” Bezos said, “In fact, I predict one day Amazon will fail. Amazon will go bankrupt.”
Bezos emerged ahead in the new landscape of retail, but the graveyard of retailers left behind didn’t go unnoticed. The story of Sears is the most tell-tailing prophecy of a company too big to fail. Sears was a forward-thinking retailer and an early adopter to e-commerce in digitalizing their famous Sears catalogue. Sears’ leadership became complacent and regressed in its vision of becoming a leading e-commerce retailer online. Along with other contributing factors since hastened their market share and ultimately their demise. An e-commerce catalogue could’ve potentially extended its runway to survive the disruption in the retail industry. Sears was the 500-pound gorilla capable to weather the retail apocalypse and was surpassed by Amazon with its startup vision on re-inventing shopping online.
The future of retail isn’t the choice of brick-and-mortar or e-commerce, but rather the two co-existing together to suit changing consumer behaviours. Ecommerce will never replace the tangibles of trying on a piece of clothing, walking out the store with your purchase or receiving a not as advertised counterfeit item in the mail. Today the showroom or pop-up store concept has re-imagined the entire experience of retail shopping. Canada Goose is one retailer that has taken the experience concept to the next level. The showroom space is without retail inventory except for trying on a jacket in a cold room under sub-zero conditions. We will likely see more experienced-based showrooms stocked with minimal inventory alongside e-commerce.
If you’re in the business of retail and haven’t already considered an e-commerce strategy, get in touch with your digital marketing agency about eCommerce channels online. Whether it’d be Amazon, Shopify, Google or Facebook Shopping they can all provide greater reach and value to your business.
Sources:
1: Swartz, Jon. “Amazon is officially worth $1 trillion, joining other tech titans.” MarketWatch. MarketWatch, 4 Feb. 2020. Web. 3 Jul. 2020.
https://www.marketwatch.com/story/amazon-is-officially-worth-1-trillion-joining-other-tech-titans-2020-02-04
2: Evans, Pete. “Shopify surges past Royal Bank for title of most valuable company in Canada.” CBC News. CBC/Radio-Canada, 6 May. 2020. Web. 3 Jul. 2020.
https://www.cbc.ca/news/business/shopify-earnings-1.5557473
