Two-thousand-eighteen is the year where Brooks Brothers, the first retail store of America will celebrate its 200th anniversary. Early nineteenth century developed and commercialized the concept of retail stores, and since then market dominance had been inevitable until the first few years of the twenty-first century. Last year, 2017, turned out to be ruinous for retailers as the market saw J.C. Penney, RadioShack, Macy’s, and Sears, each close down more than 100 stores. The U.S economy has been taking a new pace in last eight years, and 2017 has been the most productive year when it comes to wage levels, employment rate, and the overall GDP. Despite the headway, significant numbers of retail brands flunked in the American economy last year.
Shopping malls were the most affected by the 2017 retail sector crisis. There are around 1,200 shopping malls all over the country, and only 50% of them are expected to be present by the time 2023 comes around. The current generation is rapidly adapting to the e-commerce culture as the skepticism over e-commerce is gradually being overshadowed by the innovation and consumer understanding of the e-commerce giants. Whenever there is a discussion on the booming e-commerce market, Amazon, Inc. never misses out. Between 2010 and 2016, Amazon’s sales in North America quintupled from $16 billion to $80 billion. The growth of one sub-sector led to a decrease in the market share of another, and in this case the victims were the brick-and-mortar retail stores. The retail industry lost an average of 9,000 jobs a month in 2017, according to the Bureau of Labor Statistics, compared with average monthly job gains of 17,000 in 2016. The rise of mobile commerce and its consistent efforts to bring dynamism and comfort is luring a lot of consumers to the e-commerce arena.
E-commerce, without a doubt, takes major credit for the retail crisis, but there are other factors that have played pivotal roles in the emergence of this situation. One of them is over-building. The United States has 1,200 shopping malls, and the costs that come with this system of commerce is exceptionally high when compared to the emerging and booming online stores and their models. Malls are an agglomeration of retail, and they have a coherent relationship. Mall visits declined 50% between 2010 and 2013, according to the real-estate research firm Cushman and Wakefield, and they’ve kept falling every year since. This shows that the taste and demand of consumers constantly change, but the retail model has mostly remained rigid.
The past decade witnessed private equity firms take over various retail chains, which lead to overloaded debt and financial crisis for the retail owners. Eight million American retail workers could see their careers evaporate not due to technological disruption but a predatory financial scheme.
The technological advancements in the market complements the e-commerce almost perfectly. The recent use of virtual reality in online shopping culture is a trending example. ShelfZone has taken the online shopping experience to a whole new level. According to inVRsion: “A consumer could buy groceries directly from home simply with a VR headset, enjoying a more “exciting” experience through the help of artificial intelligence.” These kind of innovations are always going to nourish with time, and the retail market is definitely not on the same page.
The resurgence of the retail debacle is getting close to impossible with every passing year. One of the positive aspects is that there still remains significant numbers of consumers who prefer in-store experiences over online business models. Taking the in-store experience to a whole new level with pro-active strategies and innovation can re-ignite the interest of people towards retail shopping.
Today, retail is in crisis, but crisis can turn out to be the very factor to fuel revolution in the industry. Autonomous retail is an emerging idea that has the potential to bring retail back to life. Once autonomous vehicles are cheap, safe, and plentiful, retail and logistics companies could buy up millions, seeing that cars can be stores and streets are the ultimate real estate. Also, the retail model offers a unique combination of sight, sound, touch and smell in their shopping experience, and e-retailers today don’t have that ability. Innovative advancements and sensory insights might just be the catalysts to turn the retail debacle into a retail miracle.