If you read almost any publication these days, you’ve read about the “Death of Retail” or “The Retail Apocalypse”. Are the dire warnings overblown? Certainly! Over 90% of consumer buying happens in brick and mortar stores. Many e-commerce businesses, including Amazon, are getting into the brick and mortar retail space. The most notable example is the Whole Foods acquisition that’s all over the news.
In addition to the incursions into brick and mortar retail by e-commerce companies, you don’t even have to be paying attention to see the volume of retailers that are filing for bankruptcy and closing stores. Though Sears is probably the biggest example, stores going out of business are a common sight these days all over the country. It’s easy to believe that brick and mortar retail is giving way to a push toward e-commerce, but that simply isn’t the case.
The Retail Apocalypse
The Houston Chronicle gives a pretty compelling explanation you may be interested in. http://www.chron.com/technology/businessinsider/article/There-s-one-major-thing-everyone-gets-wrong-about-11307264.php
What is going on has a simple explanation. Retailers have expanded too much and have kept underperforming stores open for too long. At the end of the last recession, the pundits forecast a huge increase in consumer spending and retailers expanded in anticipation. Some of them incurred massive debt in the process. The lack of a big boom combined with new e-commerce offerings, along with a couple other elements we won’t go into here, left brick and mortar retailers with huge debt burdens and shrinking revenues.
Setting aside the growth of e-commerce, consumer shopping habits have changed. People simply don’t go to the mall as much anymore. That’s bad news for mall Santas and some retailers, especially the huge anchor stores. The reality is that these behemoths have been slow to adapt to a changing retail landscape and are suffering as a result.
The Labor Equation
I’ve read a bunch of news stories bemoaning the loss of retail jobs. They claim the cashier may become largely extinct in the near future. I say, “So what?”. A cashier is the least important job in any store, in my opinion. Better to take advantage of advances in automation and eliminate an extra salary, especially in the face of demands for minimum wage increases. Retailers that have adopted self-checkouts will undoubtedly save billions by eliminating these positions. Further savings can be enjoyed by restaurants that deploy self-ordering kiosks.
Even greater savings could be realized by a mass adoption of Aldi’s “cart for a quarter” technique. Retailers would no longer need to hire people to collect carts from all over the parking lot, especially since some people are too lazy to even walk a dozen steps to a cart corral. Forcing customers to invest in the convenience of a cart encourages them to return it themselves.
The new retail climate means that brick and mortar stores need to streamline operations. Hires should be made with an eye toward maximum impact to both revenues and customer experience. Masses of unskilled labor in retail is becoming a thing of the past.
Charting a Course Past the Retail Apocalypse
As I mentioned before, brick and mortar retailing is changing. In order to avert the retail apocalypse, retailers, service providers, restauranteurs, and others are going to have to adapt to this landscape. Any that don’t will undoubtedly suffer a contraction of their business if they survive at all.
Over the next few weeks, we’ll explore some possible changes, broken down by industry, such as:
- How to integrate online and offline offerings.
- Low-cost changes any business owner can make.
- Ideas to streamline a business for maximum impact.
- How to make a great customer experience the cornerstone of your business.
Hopefully, these articles will inspire entrepreneurs involved in brick and mortar selling to think outside the box. One of the foundations of any industry has always been “Innovate or Die.”
You can find much more information as well as more ideas in our book “The Cardinal Rules of Specialty Customer Relations“. Grab your copy now!