Don’t believe the hype that retail is dying
A casual observer could be forgiven for thinking that the brick-and-mortar retail apocalypse is upon us. Reports of retail bankruptcies and store closings abound, and that was before the pandemic that has seen more than 15,000 U.S. retail locations shutter in just the past two years. Without proper context, it’s no wonder some are hearing retail’s death rattle.
And while it can feel apocalyptic if your store is closing, it might surprise you to hear that total retail sales in the U.S. were up more than 10 percent in 2021 to well over $5 trillion. Globally retail sales are projected to top $30 trillion by 2025. Data that puts the lie in the “retail is dying” narrative.
The missing context is this: Retail is always in a state of disruption and store closures are a sign of shifting consumer demands and that retailers are on the right path. The role of the store is changing, but global retail square footage has grown dramatically for decades — and no industry can sustain that kind of overcapacity in the face of shifting consumer behavior. Today, in the U.S. alone, there is more than 23 square feet of retail space for every single person. The fact that the industry leaders are finally waking up to this reality is healthy.
That said, retail cannot stand still, and delivering on consumer expectations is more challenging than ever. To that end, here are five critical developments shaping retail right now that present huge opportunities for companies that are paying attention.
1. The desire to consume remains strong as ever
As mentioned above, retail sales are growing. Yes, consumers have changed what they buy and how they buy it, but they are spending. Even before 2021 rolled around, people had moved on from the early pandemic days of hoarding hand sanitizer and toilet paper to nesting, home improvement, outdoor experiences and even freshening up their wardrobe. And in 2021, it wasn’t only online retailers that benefited from pent-up demand. Brick-and-mortar stores also saw traffic from consumers trying to escape cabin fever.
2. The store must change, but it’s not going away
Sometimes it takes an actual, face-to-face interaction with an individual customer to know what the person wants. In addition, certain purchases are more likely to happen in a physical space than online. That’s why providing consumers with a physical location remains essential. It’s equally essential that historical views of the role of a store change. Stores must now be viewed as a part of a consumer ecosystem, serving a variety of purposes that help deliver on the kind of relationship consumers want to have with the company, not vice versa. This is why it’s important now more than ever for companies to treat frontline employees as an asset, not a cost. Store associates are the ones building lasting relationships with consumers, gathering information about them, serving their various and changing needs, looking them in the eye, and personally interacting. Stores and store associates are more essential than ever.
3. Technology has empowered consumers
Technology has given consumers information and access, completely shifting the balance of power toward the consumer from the company. Consumers now possess access to everything they need to make their own choices about what products and services to buy: Where to buy them. How they get bundled, packaged and delivered. How, how much and even when to pay for them.
As a result, consumers have outgrown and rejected the age-old company-customer relationship. It doesn’t matter where or how they’re buying; they’re making choices based on information from sources that transcend — and upend — traditional company marketing efforts.
4. Old marketing tactics will no longer work
We’re seeing the absolute democratization of consumerism right now. Consumers are less loyal to a brand because they don’t have to be. Instead of being the reliable demographic clusters marketers are used to targeting, consumers are constantly regrouping and changing according to social trends, identity politics, personal whims and even time of day. Consumers have always been complex, multifaceted individuals, but the low barriers to launching a company mean that this is the first time in history that consumers have been empowered to have their shifting wants and needs met by a brand that makes a diligent attempt to serve them.
5. Consumers will eventually help retail in its long-overdue reinvention
Consumers have always had agency but lacked power. Today, consumers have both. Companies that understand this know they have to refocus their entire business model around flexibly serving the collection of consumers who matter to them most. Once they recognize that consumers are in charge, companies will see that they must take honest stock of what they have, what differentiates them from the competition, and what their customer values in them most. This will help them discover exactly how to enhance the consumer experience, giving their customers what they want and need — then deliver it in a way that makes the most sense for both parties.
The bottom line? Don’t believe the hype that retail is dying. This is the most exciting time to be in a consumer-facing business in all of history. We are living in an expansive moment, and companies that reimagine the possibilities presented to them by newly empowered consumers have limitless possibilities for growth. This is a long-awaited opportunity to reimagine, reinvent, and renew the whole industry.
Joel Bines is the author of “The Metail Economy: Six Strategies for Transforming Your Business to Thrive in the Me-Centric Consumer Revolution” and global co-head of retail at AlixPartners.
The Hill has removed its comment section, as there are many other forums for readers to participate in the conversation. We invite you to join the discussion on Facebook and Twitter.