"Retail Apocalypse." It's a phrase meant to draw attention to the incredible changes taking place in the retail landscape, and it certainly works—it drives clicks, and it's one of the few emails that I opened recently. The term has been bouncing around since earlier this year, and it was echoed today in articles in the Wall Street Journal and on Consumerist. Shocking headlines aside though, if I were a business that relied predominantly on in-person retail sales I'd be more than a little concerned.
The reports are varied, and their implications are different depending on what kind of retail store you're in. And there's a big difference in target consumer behavior (some still prefer to try on shoes and clothes in person), location (the traffic patterns along Manhattan's Fifth Avenue are a world apart from suburban malls), and category preferences (the ability for service to trump price being different in say, boutique clothing stores vs. electronic big box stores). There's even a great piece on Medium about some of the facts behind the clickbait headlines.
So how does all of this affect you as a business owner? Here are a few of the key points, and their implications on small- to medium-sized retail businesses:
Business owners expect to close their brick-and-mortars
Nearly two thirds of business owners who run both an online and physical store said recently that they expect to close up their physical stores and be only online within the next ten years, according to a study cited last week by MediaPost. We can assume the 200 survey participants were digitally savvy since it was conducted by GetApp and they already have an online store, but taken as a bellwether it's a significant attitude shift in the landscape.
What this means for retail business owners: The time to revamp your e-commerce is long overdue. If you've been neglecting your online store, start planning an upgrade. And if you don't have an online store, you'd better rethink your retail strategy. The fact is that even if you do stay in a physical storefront, many consumers of products and even services want a fully transparent shopping experience where they can see the items, options and prices you offer. They may buy online or buy in the store, but by not offering both options you're going to miss out on valuable leads, traffic an sales—online and off.
Bankruptcy can happen to even the strongest brands
For those like me who grew up in the eighties and nineties at the height of mall culture and before access to the internet, the news of so many trusted retail brands' bankruptcy proceedings this year has come at an unbelievable pace. More than 300 retail businesses filed for bankruptcy so far in 2017 according to CNN Money's report today, and that's a 30% increase from the same time period last year. Many of those are smaller establishments, but it's still staggering to think of places like Payless Shoes and Sears shutting many of their stores, perhaps permanently.
What this means for small businesses: Know your finances and how your business is really performing; don't leave it up to your accountant to tell you when things are looking grim. More importantly, don't get so mired in the day-to-day of running a business that you stop paying attention to the winds of change. Be ready for change, whether it's new entrants to your category, different ways of shopping, changing consumer behavior or new technological advances. Know that change will always be around the corner, and that your business will need to adapt, market and move on in order to succeed. And don't assume that the marketing budget is the first thing you should cut when money gets tight; you'd be cutting yourself off at the knees during a critical time.
Smart shops learn from their data instead of dismissing it
One of the mot ironic marketplace twists to me, as a former bookseller and buyer, is the transformation that the bookstore industry has undergone in the last 20 years. While independent bookstores were driven out of business first by mega-chains like Borders and Barnes & Noble and the rest were practically decimated by Amazon, there's recently been a resurgence in independent booksellers and Amazon is opening its own set of physical stores like the one that opened last month in New York City. While the driving force of new book shops may be the need for community, support for local authors and a writerly gathering space, a closer look at Amazon's model reveals that they're leveraging online data to enhance offline sales and vice versa.
What this means for bookstores and beyond: Think about ways to leverage the same types of technology and behavior that happen online in your offline customer experience, and vice versa. For example, all the books in Amazon's store are presented face-out instead of spine-out, a simple change that mimics the visual experience of browsing titles online. Look at your e-commerce data to see which books are selling more copies, getting higher reviews, or being searched most, and share that information both online and on in-store signage. Explore ways to bridge the gap between your website and your store by employing tablets in store to quickly source information for customers, or chatbots on your site to provide the same friendly welcome we value in person.
Of course, there's a lot more to unpack here in terms of the impact of a radically shifting retail landscape, not just for retail stores but for any business or organization that needs to sell something, acquire someone or support a cause. We'll be exploring some more of these threads as we continue to focus on small business this month on the blog.
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