Ever since technology developers placed the entire internet in the palms of our hands,
Earlier this year, a Credit Suisse report indicated that retail closures have surpassed the historical high set back in 2008; nearly 3,000 retail stores have closed as of April 2017, and the numbers continue to escalate. Credit Suisse also predicted that store closings could exceed 8,000 by the end of the year. Some more dramatic observers call it the “retail apocalypse.”
Why are consumers forgoing their once-favourite retailers like Walmart, Sears, and Staples in favour of ecommerce websites and discount stores? The reason is simple: The familiar brick-and-mortar shops of our childhood are no longer meeting consumers’ needs. For a big-picture look at the so-called retail apocalypse, several contributing factors must be considered.
Shopping Space vs. Population
According to Cowen and Company, the number of malls in the U.S. quadrupled between 1970 and 2015, while the population only doubled in the same period. This created a shopping centre gross leasable area (GLA) of 23.5 per capita – 40% higher than in Canada. Combined with the rapidly rising cost of living and stagnant wages, mall visits in the U.S. declined by 50% between 2010 and 2013.
Changing Consumer Needs
Baby boomers’ needs are vastly different from the needs of millennials. While older generations sought products that were mass-produced yet prestigious, younger generations want products that are ethical, sustainable and authentic. For companies who spent decades mastering the former type of marketing, a rapid switch to the latter has proven to be nearly impossible.
The Rise of Online Shopping
Tying into the above, available retail shopping space no longer fits the way that many consumers shop. A brick-and-mortar store was once the only place for consumers to peruse and buy what they needed. Today, a few taps and swipes on a mobile device and consumers are presented with thousands of choices across countless online retailers.
Bargain Hunting: A National Pastime
According to a 2014 survey by the Consumer Reports National Research Center, 83% of participants identified themselves as “bargain hunters.” The survey also found that 36% of shoppers feel guilty paying full price, 59% wait for a sale to make a purchase, and a staggering 80% say they would wait for a sale regardless of their financial situation. It’s also why many consumers will visit a discount store like Dollarama before going to Walmart or another more traditional retailer if they’re shopping for something specific.
What does the future of retail look like? Today, brick-and-mortar stores still account for nearly 90% of the retail industry’s sales, but in order to avoid a complete breakdown in the near future, brands must make appropriate changes to their marketing efforts if they want to survive the retail apocalypse.
Diana Spektor | The Edge Blog