Retail is changing. Big name brands like Macy’s announced the closure of over 100 stores. Companies across the board are hitting multi-year lows. Even Ralph Lauren closed its store on the iconic Fifth Avenue. These sad anecdotes are a small snapshot of a larger picture. The world of brick and mortar is shrinking rapidly and e-commerce is coming to take its place.
Many business owners are riddled with questions. Why are retail stores closing? What does this mean for businesses, especially small brick and mortar business? And how can businesses find their saving grace with e-commerce?
Culprit One: Showrooming
Blame the customers. Their shopping habits have slowly eroded the foundation of the stability brick and mortar stores. Or rather, blame online shopping which created the ability for show rooming.
Show rooming is a consumer buying practice that strikes fear into the heart of brick and mortar stores. A consumer visits a physical store location to check out a product. They talk with the staff members, asking questions and testing out the products features. Then they return home or hop on their cell phone to buy the product online…from a cheaper retailer like Amazon.
Most industries can be vulnerable to show rooming, but it is most common among electronic retailers since customers want to examine the appearance and user friendliness of devices before they buy.
Showrooming allows customers to take advantage of an online seller’s ability to offer lower prices than a physical store due to less overhead. In some states, they can also avoid paying sales tax. They get a cheaper deal on a product, but still get to “test drive” it at a physical store.
Stores attempt to combat this phenomenon by offering in-store pickup for online purchases to save customers the cost of shipping. But this often is not enough of a savings to deter customers from turning to online retailers.
Culprit Two: Customers Research More
In the old days, a customer would visit a store to get all their information about a product. They would wander around the store, looking at different options. Sometimes they would visit multiple stores. Along the way, they would spot other items they need or want. I know I came here to buy a TV, but look those headphones are on sale! And I saw a sign that the next door clothing store is having a clearance sale. And the sporting good store I saw on the way here from the other electronics store is also having a sale, I should buy a new basketball hoop.
People did less research, which meant they were more willing to make “spontaneous” (ie: not heavily researched) purchasing decisions and had more opportunity to spot products for these spontaneous purchasing decisions. Today, people come into a physical store with their heavily researched purchasing decision already made. They go in, find the product, and get out. This results in less sales for that store and nearby ones where a consumer would previously browse.
Culprit Three: Changing Purchasing Habits of Consumers
People are spending less money on “stuff” and more money on “experiences”. There is just less money spent on clothes, electronics, and furniture than there was years ago. Since 2005, sales at food and drink places grew twice as fast as other retails and there has been a growing record number of travelers. People are splurging on these experience based industries, rather than building up their wardrobe or buying new electronic toys.
As less money is spent on the products sold by brick and mortar stores, these companies find it increasingly difficult to break even. They are getting less income due to the changing shopping habits, making it harder to pay for the upkeep of their physical locations.
Culprit Four: Changing Demographics of Shoppers
In recent years, young Americans have changed where they live. More young people are moving to cities, rather than suburbs, and they live in these cities for much longer. For brick and mortar stores in the suburbs, there are just less people living in the area which translates to less people visiting them. Physical stores are finding it harder to be economically viable as the number of young people living in their community is less.
The Impact on Business
Several factors go into the ever declining state of the sustainability of brick and mortar stores. Every year news headlines sound like a retail store doomsday apocalypse message with big name brands closing locations or declaring bankruptcy. If these business giants cannot keep up their physical locations, what chance does a small mom and pop brick building have to survive?
The status quo does not mean that every physical location is destined for closure anytime soon. Some physical locations may maintain their ability to break even, or even miraculously turn a decent profit. But for the retail industry, the writing is on the wall. Unless you serve a demographic that prefers shopping (and buying) in person, it will continue to be increasingly difficult to maintain your physical location.
E-Commerce as the Retail’s Savior
Closing your physical location does not mark the end of your business. In fact, it can be the start of growth for your company! Shifting to an e-commerce method can be a great economic move for your company.
E-commerce is coming faster and faster to our society. Every day, companies launch their abilities to sell online. And every day, more customers are turning to purchase these products online. E-commerce is no longer just a trend for certain industries. It is a viable option for all types of businesses to cut down on costs, reach a greater audience, and make sure they survive in a world of closing retail stores.
You do not have to make the shift overnight. You will want time to work out any kinks with new shipping methods, new databases, new websites, all of the logistical details that pop up once you try a new system. The more you build up your company’s ability to sell online, the more you can strengthen your company in today’s market.
Branding Your E-Commerce Business
You have heard it a million time. Your brand is everything.
With e-commerce, brand is EVERYTHING. A customer cannot come into your physical location and be impressed with your friendly helpful staff right away. They are not influenced by the music playing in the background, the artwork on the wall, and other subtle elements at play in a physical store that create just the right atmosphere to express your company’s personality. They cannot feel, examine, and play with the products.
Instead, they rely on a few things in making a snap judgment of your organization. The layout of your website. The logo of your company. The images of your products. The social media presence of your brand. These factors play a large role in shaping the customer’s opinion of you, since they have little else to go off of.
The importance of stellar marketing cannot be overstated for e-commerce companies. At 10twelve, we offer extensive services to help you build your brand. We create stunning logos that perfectly capture your company’s essence. We build a website designed to entice customers to buy and return again and again. We integrate your presence on Shopify, a fantastic e-commerce platform that you need to be on. We can help you at every step of the way in creating a thriving e-commerce brand. All you need to do is contact us today.