I’ve been thinking a lot about The Economist’s recent article on American retailing, and the issue of store closures.
Some 4,000 US retail stores were shut in 2016, and at current rates, another 7-8,000 doors may be locked for good this year.
As we know, there are many reasons why.
Over-Storing and Digital Storing
There’s little question, compared to other developed economies, that the US is ‘over-stored,” with roughly five times the shopping centers of the UK. There’s little question that several historic Middle-America flagship brands — many of which anchor 100’s of malls — are now under siege. And, as my friends in retail real-estate continue to point out, there’s little question that US demographic shifts over the past 20 or so years have marooned many a mall in catchment areas of declining household income.
Of course, there’s also that tidal wave known as e-commerce.
Store closures touch the nation in many painful ways. As The Economist article pointed out, retailing now accounts for 1-in-9 US jobs, and worst-case store closure scenarios over the next several years place nearly 5 million jobs at risk. There’s the social landscape blight of empty stores and weed-infested parking lots, and the potential financial implications of the $2.5 trillion USD capital (both debt and equity) supporting US retailing.
But a bleak landscape for retailing?
It’s certainly concerning for those now affected (and soon to be affected) by store closures. Job loss is painful by any measure.
But I’d argue that store closures are not proof that the retail sky is falling. In today’s unified commerce world, store presence is increasingly a minor measure of brand health.
The retail sky is changing. In a major way. Irrevocably.
The Major Shift
The best retailers I know are radically re-thinking the purpose, the capabilities, the size and location of the store. They’re restructuring messaging and services to deliver differentiating value across a decision journey that regularly begins on-line – even when it ends in the store. They know, as posted by Forrester’s ongoing research, that more than 50% of US retailing revenue is now directly influenced by or purchased through the internet.
They know, as The Economist reports, that from 2014-2016, job losses in traditional store-based retail were offset by postings for e-commerce, warehousing, and technology jobs.
And they know, as industry leader Neil McPhail pointed out in response to a recent post, that it’s no longer about the future of the store — it’s about the future of experience. From inspiration all the way through to post-sale service.
A bleak future? Hardly.
But within the retailing revolution comes this question: can you keep pace?