Opinion | Retail Industry
The Fight for Success in the Retail Industry is Far From Over
Image by Simon Launay
Image by Simon Launay
85% of retail sales are still made in Brick and Mortar stores.
Amazon still has a ways to go before being the top retailer in fashion.
Customer experience is the key to survival of physical retail spaces.
With consumers accounting for around 70 percent of the economic activity in the United States, it is safe to say that the world keeps a close eye on consumer spending because it could make or break economical growth. With retail giants such as Wal-Mart, Costco, Home Depot, and Target losing market share and their margins shrinking, it is easy to see how so many people get caught up in this so-called “retail apocalypse.” Are brick and mortars soon to be obsolete? Most of society says yes, however, fashion disagrees. Ever since Amazon launched its Prime membership program, which offers free two-day shipping for over one million products in 2005, people cannot stop talking about how Amazon will end all brick and mortar retailers for good. A recent survey from trend forecaster WGSN proves differently.
WGSN found that only six percent of surveyed consumers mentioned Amazon as a place to purchase women’s clothes. “People are going to Amazon for something specific, but they’re still not habitually browsing Amazon for fashion,” says Francesca Muston, head of retail at WGSN. Today, 85 percent of retail sales are still made in brick and mortar stores. According to Matthew Fassler, an analyst from Goldman Sachs, people love to dwell on the fifteen percent growth rate of E-commerce but forget to mention that retail sales are still left with 70 percent of overall sales.
The physical retail world is becoming an industry in which only the strongest will survive. The key to survival? It is more important now than ever for retailers to know their customers. Apple stores have done a great job keeping strong connections with customers, which explains why there is an Apple store in almost every mall and why these stores are always packed with customers no matter what time of day. While many retail stores may be struggling, Apple isnâ€™t. The company released its quarterly statements this past August, showing a total revenue of $45 billion, which increased by seven percent.
Retail is not dead because customers like an experience. When shopping online, people want convenience, so their purchases are transactional rather than emotional. Most people who log onto Amazon log on with intent of getting exactly what they want. People are not spending time browsing Amazon for the latest trends for the season. Retailers who want to survive are starting to step up their store experience, providing attractive showrooms, interactive technology around the physical retail space, and knowledgeable and informative sales associates, as well as offering omnichannel shopping solutions.
Amazon may be doing well at widening its business around numerous different categories, like sporting goods, electronics, and home goods, but fashion is not yet one of these leading categories. Retailers can only compete with Amazon not by attempting to sell as many categories as the company, but by doing the opposite. Physical retail spaces need to determine their strengths in their business and to expand on these strengths to generate stronger connections with consumers.
Amazon is an undoubtedly strong company, with their stocks gaining 31 percent over the past twelve months. However, it is even harder for online retailers such as Amazon to make a connection with customers through providing a seamless shopping experience. The retailers who are not struggling are the ones taking advantage of their ability to create a unique guest experience for each and every customer.
Are brick and mortars soon to be obsolete? It is safe to say that although customers have been loving the accessibility end efficiency of online retailers such as Amazon, retail is not dead. Instead, it is a real fight to the finish for physical retail stores to see who are the strongest businesses that give customers exactly what they want and which businesses fall to the pressure. Do not give a blind eye to the retail industry because just when the world thinks it is dying. It is undergoing evolutionary changes.