July 27, 2017

What’s hurting retail?

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It’s easy for retailers to believe the media narrative that the industry is dying, slowly having the life squeezed from it by Amazon and its virtual companions. The fear that we’re all just running, Indiana Jones-style, from the boulder that is internet shopping can make it hard to make good decisions about the future of your enterprise. 

 

But you can stop worrying that you’re about to go out of business — as long as you keep up with the changing times.

 

After all, failing to modernize is what Forbes names as the number two reason of Five Reasons Why the Retail Apocalypse is a Red Herring. Of the many chains closing stores, the piece says, “most … have seen their problems build over decades.” Some struggled with branding and others with product selection, along with several other missteps that could have been avoided.

 

Even shopping malls, those monstrous buildings of yore that even other retailers often see as outdated behemoths, haven’t been killed by online shopping and brick-and-mortar boutiques. They’re being killed by other, better, more engaging malls.

 

“The malls that have succeeded are those that had the money to renovate and that have been able to bring in new venues that aren’t department stores. Restaurants, comedy clubs, play centers, party venues, bowling alleys, and other venues that sell experiences instead of stuff still draw people to malls,” Jeffrey Donnelly, senior analyst at Wells Fargo Securities, tells The Wall Street Journal.

 

“Relocation of an anchor department store from the weaker property to the newer mall was a common tipping point for the downfall of the weaker mall,” Donnelly says.

 

Many retailers’ prospects aren’t weak in the slightest, it turns out. In fact, retail sales in the first quarter of 2017 increased 4.1 percent compared to the first quarter of 2016, says Greg Buzek of IHL Group. Buzek also notes that 19 large retail chains are opening 2,861 stores in 2017, even as other chains are shuttering doors. Even previously online-only corporations, like Warby Parker, are opening brick-and-mortar locations throughout major cities.

 

“The industry has under-invested in technology for as long as I can remember,” says Paula Rosenblum, author of the Forbes piece. And she’s right. By investing in technology that makes your back-end processes go quickly and smoothly, you can free up your employees for customer service – the main reason shoppers haven’t given up on retail.

 

“Retailers, especially those of the “big box” variety, are adding a lot of employees into their stores over the coming three years,” Rosenblum said. “When shoppers become confident that employees are actually adding value, they’ll come to stores.”

 

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Image: iStock