Newsflash – Retail isn’t dead. There is article after article decrying the “apocalypse”, “the death of retail” or that everything is being “killed” by Amazon. Every day, another storied retailer either files bankruptcy (Nine West, Bon Ton), announces waves of store closings (Sears, Ann Taylor) or closes up all together (Toys R Us – as a child of the 80s, that one hit me hard!). What is dead, is old-school retail. The idea that if you build it, they will come. The concept of the cavernous shopping mall as the center of suburbia. That the Sunday circular drives the week. That physical retail is over and everyone is shopping from their phones.
In fact, according the to US Department of Commerce, 2017 marked a three-year high for retail sales – up 4.2% YOY. While e-commerce sales grew at a rapid 16% pace, sales online only account for 9% of all retail sales. To say this another way, 91% or over $4.6 TRILLION was spent offline. Much of the growth is coming from online, but we have a long way to go before more shopping is spent online than off.
If “old-school” retail is dead, what do retailers need to do in order to exist in this changing environment? To take it down to its simplest terms, retailers need to be relevant to the customer and focus on customers’, not shareholders, needs. And customers need retailers to be convenient or to add value to their lives. Customers have so many options than ever before and are quickly embracing new technology and "disruptors". For retailers, it's innovate or die.
Over the next two days, I’ll do a deeper dive into what retailers are doing in order to be convenient and to add value, in order to win the hearts and wallets of their customers.
What do you think?