Between 2010 and 2013, mall visits decreased by 50%, and the trend continued until the present. Even more, when pandemic struck in 2020, driving all physical retail stores shut. This occurrence has been happening in Southeast Asia for several years, but very few realize that this is the retail apocalypse.
Despite growing optimism about the end of the pandemic, research has predicted that about 10,000 stores could close in the U.S. alone this year. This number will set a record high for a new trend in the retail world across the globe. The whole world was surprised when retail tycoons such as Bed Bath & Beyond, Macy’s, and J.C. Penney closed down at the beginning of the year.
Many call this phenomenon the “Retail Apocalypse.”
This is a critical juncture for the retail industry. While many retailers are under severe pressure to survive, those privileged to make it through the pandemic are left with an opportunity to optimize a much stronger and more sustainable relationship with their customers.
Giant retailers and multi-branch businesses collapse one after another, and many long-time running firms have eventually closed their outlets.
Some people suspect that this occurs because the retail industry grew too fast over the years. The growth rate of shopping malls was almost twice the population’s growth. Other people point their fingers at the incredible rise of e-commerce. The change in consumer habits over the years towards online shopping is the impending doom for physical stores. There are already victims of the retail apocalypse in the United States and Europe.
What are the causes of the retail apocalypse?
There are four leading causes of the retail apocalypse worldwide and made many retailers out of business. Here are the details:
Rapid Growth in E-commerce
People blame the rise of e-commerce as the main culprit of the retail apocalypse. E-commerce changes people’s shopping habits from shopping in malls and other physical outlets to shopping from the comforts of their homes. Not only that, e-commerce can be very competitive in terms of price and promotions.
E-commerce data proved that it experienced an increase in sales up to 11% – 20% during the holidays compared to retail stores,, which only experienced a rise of 1.6%. There are even several department stores that experienced a decline in sales.
Although everyone looks forward to the new normal, it won’t be the same as the old normal. The pandemic has driven permanent shifts in consumer behavior. It has tipped many digital laggards over the brink — retailers unable to respond to customers’ moves online face a very challenging future.
Too many malls
The data states that the growth rate of malls in the United States exceeded the growth rate of the population. Despite the construction of new malls, mall visits declined by half and kept falling as time went by.
Mall visits decline also aggravated by the change in consumer behavior. Recently, mall visitors prefer to spend their money on restaurants in a mall, rather than buying shoes or new clothes. This phenomenon is called the “restaurant renaissance.”
The death of middle-class customers
Sadly, many giant retailers whose target customers are middle-class customers cannot compete with larger chain stores that can sell at lower margins.
With this, middle-class people prefer spending their money on cheaper stores. Eventually, independent retailers lost their customers and ended up closing their businesses.
Poor retail management
The final culprit that drove the retail apocalypse is poor retail management. Lousy inventory management can easily make merchandise out of stock. This makes customers prefer to shop online, which has better stock availability.
The condition is made worse by the poor shopping experience. When we shop at a retail store, it lacks a unique customer experience usually offered by the convenience of online shopping.
Surviving the retail apocalypse
Not every physical retail store ends up closing its business during the retail apocalypse. Retail companies such as IKEA or Walmart have adapted and emerged as survivors in the retail industry. Not only that, but these two retail firms also managed to increase their sales in recent years.
The secret is to adapt and stay competitive with the help of technology. Intelligent business owners utilize inventory management systems, POS, and other functional business tools to improve items management in their warehouses and stores and optimize the overall customer experience.
Integrating an inventory management system with the Point of Sales (POS) system is a great way to make a better shopping experience. Not also facilitates the payment process, POS also helps retail stores in managing running promotions and customer loyalty.
With the aid of technology in running your business, it is also best to utilize both the online and offline platforms for your shop. You may keep your brick-and-mortar store up and running while having an extension in an e-commerce site or marketplace offering your products and services. This way you can have several platforms for customers to continue to reach your brand at their convenience.
There is no easy solution to the challenges faced by the retail world; however, understanding consumer behavior is a great place to start. It is best to have a good insight into consumer, retailer, and marketing trends to cope up with the changing times. Once you understand changing consumer behavior, it will be easier for you to adapt better in order to provide the customer service that will keep your business thriving.
Edited by Chooli