Save the Eulogy! Retail is Not Dead!
Today’s post warns you to Save the Eulogy! Retail is Not Dead! The author, Misty Belsha, is a Director of Analytics for Xceligent’s Kansas City market. Connect with Misty on LinkedIn: Misty Belsha
We’ve all read reports indicating the sky is falling for shopping centers and malls. Then, a contradictory report is released the following day stating the retail market is just fine and we need to adjust the way we’re looking at it. Well, which is it?
To simplify, retail is the optical illusion of commercial real estate. From one perspective, media reports paint the picture of a lifeless and stale retail industry. However, when you look from another angle, statistics and factual reporting from credible sources throughout the country cite new restaurants, specialty stores, and non-traditional retail tenants are driving growth in the retail sector.
According to the August 2017 U.S. Census Bureau report, estimated retail sales totaled more than $1.2 billion dollars in 2Q17 with online sales accounting for only 8.9% of that total. However, year-over-year sales volume in the eCommerce division increased by 16.2 %.
You’re probably wondering what’s fueling this rise in eCommerce sales. My guess is no one wants to put “real” pants on and walk into a store. Or, maybe that’s just me…. Joking aside, convenience is a major factor. The modern American lifestyle is so busy we’re always seeking to find balance and enjoy a little downtime. After a typical work day (or week), taking children to activities, finding time to prepare meals, etc., the thought of even walking into a store is enough to bring on stress hives. For many, standing in checkout lines, fighting crowds, and digging through unorganized racks isn’t the way they want to spend what little free time they can scrounge up. Instead, after finishing what feels like a 29.3-hour day, changing into their most comfortable sweats, plopping onto the couch, and ordering nearly anything a heart desires from their snazzy smartphone is much more appealing. Heck, even groceries are available online now! Beyond the convenience it offers, additional advantages to online shopping include price comparisons, increased variety, no crowds, and less impulse shopping. Did I mention you also don’t have to wear “real” pants?
Though online shopping has become increasingly popular, you can save your eulogy. The need for brick and mortar stores isn’t dead, but traditional retailers are having to step it up to stay in the game. You’ve heard the saying “go big or go home”? That’s exactly what stores are going to have to do to survive in the evolving world of retail. But, adapting requires some creativity. Landlords have kept vacancy rates low by backfilling large big-box type spaces with non-traditional uses such as gyms, postal services, churches, and daycares. Specialty stores such as Spirit Halloween are also backfilling large spaces, often previously vacated by national tenants like Gordman’s. Others have even converted the space to mini storage. The rules of retail have changed.
What could traditional retail stores offer that would outweigh the benefits of online shopping? Plenty, actually – if they’re willing to make changes that will appeal to the modern shopper. If consumers are going to give up their precious free time to visit a store, they expect the trip to be worth their while. Maybe they just ran in for yoga pants, but that’s not what will keep them coming back. People want the experience, social interaction, and atmosphere that you can’t get from shopping online. This includes upbeat music, entertainment, and energetic, attentive staff that will provide personal service. In-store shopping is often used as a social gathering where friends and family meet to catch-up and browse, grab a bite to eat at nearby restaurants, and/or just enjoy a fun day.
Like an optical illusion, when you look closer or approach it from a different perspective, we see that brick and mortar is not dead. While true that stores that aren’t evolving their business model to meet modern expectations will lose relevance and be left behind, those who adapt will continue to thrive.