At the basic level of retail industry chatter online, much of the focus is on the battle between brick-and-mortar versus eCommerce. While the closing of several big box and department stores alongside online shopping’s reshaping the retail shopping are certainly discussions worth having, it doesn't encompass the entire retail spectrum.
Retailers at the local city level are seeing an impact under the digital transformation of the industry and should not be left out of the conversation. These are the stores that do not have large investors necessarily and are usually not chains or franchises. The issue that arises when focusing in on local retailers is how they're faring against larger brand names and eCommerce.
We've heard a lot about bigger retailers like Macy's and J.C. Penney shutting down big numbers of brick-and-mortar locations. Of the 5,321 brick-and-mortar store closures this year, a 218 percent year-over-year increase, according to Fung Global Retail & Technology’s Taking Stock in Retail: The 2017 Midyear WrapUp report, how much can we attribute to local shops? While this number is not readily available at this time, it appears that most of these store closings are tied to multi-location retailers with larger revenue streams.
Currently, the majority of everyone's focus is on the closures of big name merchants like Sears and Kmart. As we reported this month, the local retail mall is evolving, but it’s not out the door yet. With the larger department store anchors closing all over the country, shopping malls are becoming more innovative in the way those spaces are repurposed. While malls are turning empty spaces into restaurants, arcades and other entertainment avenues, local stores are seeing a positive impact from the digital transition.
Signs that local retailers are not in as much trouble is actually thanks to the influx of the online world. While there was and will likely always be a back and forth pull between eCommerce and brick-and-mortar stores, digital is doing more good than harm as evidenced by recent research. Local retailers are taking advantage of digital tools online to help boost their presence and overall sales.
Today’s consumer is looking for a high-quality shopping experience that is both personalized and swift in delivery. Through the sharing communities of social media networks, consumers have been able to get their voices heard much more quickly and as a result investors are sinking in $2.8 billion, up from $266 million in 2013, into local delivery efforts according to Accenture’s The New Delivery Reality: Achieving High Performance in the Post and Parcel Industry report.
Marketplaces like eBay, Amazon and Etsy are allowing smaller retail businesses to compete on the same level as the existing department stores and the current online shopping arena. In a sense, the internet is allowing local retailers to amplify their products and services in such a large way that was not available before. As we reported earlier this year, a surprising group of individuals helping to lead the local store charge is generation Z. Research has shown that this group is looking for more authenticity in products and are interested in physically seeing and trying out an item.
It appears that the trend of Generation Z shopping in brick-and-mortar locations is carrying over to the rest of the population, according to the U.S. Census Bureau, with 92 percent of all shopping transactions occurring offline at physical stores. As the retail evolution continues its path in retail, it’s likely that we’ll continue to see local retail stores utilize digital tools to help ingratiate themselves into convenient places for consumers.
In this week’s retail news, Payless ShoeSource has survived its near bankruptcy filing state. The shoe retailer is planning to refocus its efforts to opening new locations in Latin America and Asia. Fashion retailer Ralph Lauren has announced the closing of 25 percent of its retail locations. Following the closure of its famed 5th Avenue store in New York City, it may not come as a surprise to the retail industry that the fashion brand is looking to trim the fat.
Despite the ups and downs of the retail industry, mall executives are positive about the future of their large scale buildings. As we reported earlier this week, many mall higher ups are helping to reinvent their spaces and have confidence that eCommerce is not overtaking brick-and-mortar.
As it turns out, local retailers are not only surviving but they’re thriving thanks to digital assistance.