Retailers continue to face downward pressure of shrinking retail revenue and store closings. While these challenges are daunting, it offers retailers a distinct opportunity to adapt, be inventive, and create physical store advantages that online experiences can’t provide.
As of April 13th, in the U.S., brick-and-mortar store closings (5,994) in 2019 have eclipsed the total store closings of 2018 (5,864) from data provided by Coresight
Store losses include:
Payless ShoeSource - closing 2,500 after filing for bankruptcy in February
Gymboree - closing 800 stores after filing for bankruptcy in January
This is the continuing result of shifting user behaviors to shopping online.
By 2026, 25% of all U.S. retail sales is predicted to be generated through online shopping. According to analysis by UBS, for every 1% increase in online growth, approximately 8,000 to 8,500 physical retail stores will close. While there are numerous factors that affect user behaviors and store performance, the long term trend points to continued retraction.
Data from the Bureau of Labor Statistics predicts that 75,000 stores will close over the next 7 years. This averages out to 11,000 stores shuttered per year, doubling the rate of current store closures.
If online penetration reaches 10%, here’s a snapshot of how retail sectors will be impacted:
- Clothing stores will shed 21,000 stores from the current 82,200 stores (-25%)
- Consumer electronics stores predicted to lose 10,000 from 39,000 (-25%)
- Home furnishings to trim 8,000 stores from the current 25,300 (-32%)
- Home improvement will lose 1,000 stores from current 14,500 stores (-7%).
- Grocery stores will decline by 7,000 from current 89,500 levels (-8%)
Evolution Is Painful but Necessary
Shopping habits will continue to shift, morph and evolve. Disruption will be painful and tough. But, brick-and-mortar will still offer incredible opportunity, especially to companies that embrace more creative, engaging customer experience opportunities.
According to Coresight, 2,641 openings have been announced to this point in 2019. Openings include: Discount chains (Dollar General, Dollar Tree, and TJ Maxx), Internet retailers (Casper and Warby Parker), and Grocery (up 30% in 2018 - see JLL). H/t to the surging Publix, supermarket choice of Florida Man.
Because of changing shopping habits, this transitory time will cull many traditional approaches to the retail experience.
Embracing Change and Opportunity
For retailers, a survival mode strategy won’t work. Now is the time to focus and confront the problem with ingenuity, creativity and rigor. Adaptability and inventiveness will offer new opportunities to bring customers to the physical store. Active planning, customer research, objective analysis and a “fail fast” execution approach will greatly help identify the most effective solutions.
These opportunities should embrace giving customers better, improved options to buy the products both online and in-store. The customer is in charge - even more so with the dominance of mobile shopping. When customers visit brand websites to research products, they should have easy options to finish their purchase in the way that best suits their needs.
Brandleap gives customers a seamless experience to not only buy online, but pickup in store, as well. A simple, seamless, and in-the-moment conversion experience offers more opportunities for customers to visit, engage, get answers and buy products at retail stores.
Visit Brandleap.com for more details or to set up a demonstration.