Retail Armageddon. Retail Apocalypse. The demise of retail. It’s a story worthy of high drama headlines.
According to the Retail Research Institute from the start of the year 2016 until the end of April 2016, 2,324 UK stores have closed. Fung Global Retail, which has it’s own store closures counter revealed that closure announcements in the US have increased 282% year over year.
No surprises; the roll call of the retail dead and dying is also a roll call of the retailers who were simply slow to latch on to the moment the internet got switched on, and consumers demanded different and better products and services - making retail tech innovation the equivalent of big data.
It’s startling that at certain retail events, speaker and panel topics still include “bridging the gap between online and offline” or “your customer is on the go - mobile is the future of retail”. Topics with echoes from a circa 2010 mobile marketing event. Event organisers are not in a time warp. There are simply many retailers still grappling with these issues.
But retail isn’t dying, it’s just changing at a spectacularly furious pace.
A brilliant quote in slide one hundred and something of Mary Meeker’s recent internet report from Nathan Blumenthal, Co-CEO at Warby Parker: “I don’t think retail experiences are dead. Mediocre retail experiences are dead.”
Consumers are vocal and ruthlessly transactional in their interactions with brands and want to share their experiences. Fast fashion is now seasonless. Grocery and dining experiences are finding new success in subscription models. You can see online exactly what a pair of sunglasses look like on you before you get it delivered. People are buying online and collecting in-store, or browsing in-store and buying online and any number of combinations of that.
And then there’s Amazon. Certainly a dull, lacklustre place to window shop - but having invented frictionless online shopping, they’ve carved out the world’s greatest marketplace for trust-based effortless buying. It’s difficult to compete against that.
Start-ups have been pivotal to disrupting retail with agility and a basic problem-solving approach to the retail crisis. Some cutting edge retailers like John Lewis, Tesco and Target have certainly grasped this by dropping investment in labs and incubators while brands like nike.com are embracing the best of innovative technology and selling direct to consumer to essentially own that experience. Those who seem to have been caught off guard are now scrambling for quick-fix solutions.
While data analytics, payment systems and supply chain management have traditionally topped the technology agenda, top tier retailers, in particular, are also recognising the value of enhancing a customer experience. Many driven to enhance dynamic and personalised brand and product experiences online and in-store.
It’s far easier for smaller online retailers to respond to change by adopting new technology and adapt their business models around it, but large retailers are lumbered with heavy duty tech legacy systems which are as difficult to remove, upgrade or replace as they were to integrate.
New independent e-commerce sites are in an enviable position today where they can build their entire business model around integrating technology and systems that support the changing demands in customer experience and expectations. And as start-ups themselves, often defining themselves as tech businesses over retailers, they are in a better position to scale their business with the right technology partners, quickly.
So on the question of retail death - it’s highly exaggerated.
The old guard needs to catch up and invest in disruptive technology that will ride the change that is unfolding. And new agile retail players and technology providers will emerge as consumers continue to be driven by consumption, as they have always done.