What is the state of Retail in 2017? What are the movers and shakers doing? And are there any retail stores left to close?
You can hardly keep up lately with all the news, good and bad, about the state of retail. News about customers shopping more online, and using mobile phones to do so. The expansion of Amazon.com to the physical retail channel and Walmart’s effort to mimic Amazon’s online business are also headlines.
Reports of thousands of retail stores closing in the US and elsewhere keep industry commentators and opinionists busy. Many suggest that retail technology may help to stop the rot…
Let’s look further at the matters that influenced the state of retail during 2017.
Retail customers continue to shop more online
There is no doubt that more retail customers are shopping online. The U.S. online sales are expected to reach more than $459 billion in 2017, rising 14% from last year and accounting for 12.9% of the anticipated $3.56 trillion in total retail sales, according to Forrester Research.
And retailer customers shop more online using mobile devices. In fact, according to Justin Smith, CEO of OuterBox,. He said that significantly more people are accessing the web from a tablet or smartphone than a desktop, and they’re doing it with more eCommerce intent than ever before.
The online shopping experience clearly has a major effect on eCommerce sales: The Forrester 2016 Customer Experience Index found that digital Retailers delivered 17 positive experiences for every negative one, compared with just 13 among traditional retailers.
Amazon.com is making big moves while Walmart is trying to stay relevant
Amazon.com has made huge progress towards establishing Bricks and Mortar businesses during 2017. According to Dennis Green, writing in the Business Insider, Amazon.com has opened bookstores in major cities like Seattle, Chicago, and New York. He says that the stores operate exactly the same as Amazon’s online bookstore, since they allow visitors to browse a curated selection similar to how it appears on the site. There are currently 11 stores open, with two more on the way.
Even more significant was Amazon.com’s acquisition of natural foods store Whole Foods. Whole Foods was already a national chain with more than 450 stores, but with the power of Amazon behind it, it has the potential to be something even larger (Business Insider). By the way, Amazon.com paid $13.7 Billion for Whole Foods (Bloomberg). However, with the acquisition of Whole Foods, Amazon.com was entering Walmart’s territory.
So what was Walmart doing during 2017? “Walmart has an annual turnover of $170 Billion and has largest share of US grocery retail sector by far” writes Phil Whaba in Fortune. That means that they really needn’t have to worry about Amazon.com, or do they? Walmart is worrying, and doing something about it…
Walmart is taking the battle with Amazon.com on the latter’s own soil – ecommerce. “The e-commerce competition between Walmart Stores Inc. and Amazon.com Inc. is heating up, and Walmart executives are saying “bring it,” with plans to continue investment in its online and multi-platform capabilities” reported Tonya Garcia in Market Watch. For the second quarter, e-commerce sales, which include purchases that are shipped to customers’ homes as well as transactions that are fulfilled in stores, such as the online grocery service, were up 60%, conclude Tonya.
But what was happening with the other retailers during 2017?
The apocalypse of retailers
The apocalypse of retailers refers to the closing of a large number of American retail stores since beginning in 2016, according Wikipedia. There was no respite for the industry as the apocalypse of retailers kept going on during 2017. Derick Thompson (The Atlantic) suggested that there are three explanations for the demise of America’s storefronts:
- People are buying more stuff online than they used to.
- The USA built way too many malls.
- Americans are shifting their spending from materialism to meals out with friends.
However, there are different opinions about the severity of the apocalypse of retailers. Glenn Taylor in Retail Touch Points writes that the retail apocalypse is more like a retail transformation. He suggests that while many retailers remain in flux, it appears more brands are getting the right tools in place to engineer a turnaround. Some commentators recognize that retailers shouldn’t seek the answers for the problems outside their organisations…
Matt Townsend, Jenny Surane, Emma Orr and Christopher Cannon suggested in Bloomberg that the problems with US retailers are of their own making: “The reason isn’t as simple as Amazon.com Inc. taking market share or twenty-somethings spending more on experiences than things. The root cause is that many of these long-standing chains are overloaded with debt—often from leveraged buyouts led by private equity firms. There are billions in borrowings on the balance sheets of troubled retailers, and sustaining that load is only going to become harder—even for healthy chains.”
If the retail apocalypse can be countered by turning your company around, which usually involve spending more money, but there is no money, well then…
So, will retail technology keep the retail apocalypse in check?
How did retail technology affected the state of retail during 2017?
The adoption of the latest retail technology is proposed as one way to stop the demise of retail stores. Especially is the use of learned machines, data, and virtual- and augmented reality seen to make the in-store shopping experience of customers more pleasant. That, some says, will bring the feet back in the stores.
“With shoppers’ expectations rising, the proliferation of data and new touch points, and increasing competitive pressures, retailers must focus on delivering the most relevant customer experiences possible in order to succeed”, concurred Jeff Barret in Inc. That’s where the problem is with retailers – they have the data, but they don’t know how best to use it…
“Many businesses are failing to make the most of the technology available to them, gathering only a tiny fraction of the available data. They are using valuable manual resources to process and analyze the data they do get and presenting the findings in an incomplete or unnecessarily complicated way”, writes Patrick Reynolds in his blog eTech.
Thus, although retail technology was around during 2017, it seems that most retailers missed the opportunity to use it effectively.
Concluding
Now you might be asking: “What will the state of retail be in 2018?” It may be ‘same old, same old’ or a barrage of new pleasant (or unpleasant) surprises. I don’t know. May it is time that we go back to our customers and ask them. I’m sure they will know the answer…
Happy 2018!
Images:
- Georaph.org.uk
- Pixabay.com; Pixabay.com
- StaticFlickr.com
Read also: Crossing the digital threshold – adding Clicks to Bricks for sustainable retail outcomes
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