We have been inundated with gloomy stories of it being the end of days for brick-and- mortar establishments. If the many news articles are to be believed, e-commerce is wiping out retail stores with just a few clicks. But statistics point to a different reality. The Census Bureau reports a 4.2 percent year-over-year growth for retail sales. In 2017, every month showed an increase in sales compared with the same sales period in 2016. Still, the assertions of the retail “apocalypse” persist.
Are many retail stores closing? Yes - that’s business as usual, as it has been for decades. A recent report published by the IHL Group had a lot to say regarding the exaggerated reporting of the supposed death of retail stores.
Some of its findings included:
- A net increase in store openings. By mid-fourth quarter 2017 there had been 4,000 store openings.
- For every company that has closed its doors, 2.7 companies are opening.
- In the department store sector (supposedly the most under threat) there were just as many store openings as store closings.
- 751 brands are increasing their number of stores compared with 278 brands who are actively reducing store counts.
- 42 percent of retailers are opening new stores, 43 percent are holding steady with their current store count, only 15 percent are decreasing their number of stores.
- 80 percent of consumers said they visited stores as frequently or more frequently than they did in the previous year
The Future of Retail
All of this certainly doesn’t seem to spell the end of retail as we know it. There are, of course, specific business sectors and regions that have been hit hard by the closing of retail stores. Currently, online retail is responsible for only 10 percent of total retail sales. Retailers that are thriving are embracing new technologies and an experiential model that is reinvigorating brick-and-mortar store growth.
At the moment, retail is undergoing an intense time characterized by rapid change. Businesses that have been able to adapt to the new landscape are reaping the rewards by creating omnichannel options for their consumers, such as offering opportunities to buy online but pick-up in store (BOPIS). Although a lot of people buy goods online, a vast many prefer to interact with the products (and sometimes, in-store experts) before committing to a purchase. The knowledge that people still like to use their five senses in a brick-and-mortar environment has led to the now-famous term, “experiential retail” which describes personalized in-store experiences. We’ve seen how stores are shifting their focus to offer authentic experiences to draw foot traffic into their stores.
Some examples of these offerings:
- An art supply shop offering classes in drawing or painting.
- A sporting goods store offering tennis simulators and climbing walls, so shoppers can interact with the products in the simulated environment.
- Appliance stores offering cooking classes.
- Clothing stores providing interactive high-tech fitting rooms.
Stores are changing their floor sizes to incorporate the experiential aspect into their business to engage their customers for the long run. One big thing retail stores will need to make sure they offer is Wi-Fi so their customers can research products online while in the store. Currently, only 26 percent of retailers provide this nearly essential shopping aid for their customers, and just 28 percent offer BOPIS (buy online, pick-up in store). Stores that actively integrate an experiential retail approach along with technological savvy are the ones most likely to succeed.