With headlines setting off alarms forewarning the death of retail, it is easy to get sucked into the overwhelming stream of information and data. Luckily, there is more than one side to every story, and that data can actually support a more promising position on the future of the retail industry.
A recent article from the WSJ calls 2017 “the year of bankruptcies,” with eight bankruptcies since the beginning of the year. The most bankruptcies in one year happened in 2008 when 20 companies declared bankruptcy. Over 3,500 stores are expected to close this year. There has been a decrease in foot traffic equaling 6 percent per year. Visits to shopping malls went down 50 percent from 2010 to 2013. Online and e-commerce was the main driver of this large drop, but changing demographics and needs were also contributing factors.
According to a recent New York Times article, “e-commerce grew by an average of $30 billion annually” between 2010 and 2014. Further, the average annual growth has increased by $10 billion to an average of $40 billion in the past three years. This does not paint a pretty picture for the future of retail.
However, it’s not all doom and gloom. Let’s dig deeper. Retail is definitely changing, but it’s not dead. Some sectors such as home-improvement retailers actually increased 5.9% and food service and drinking places saw a modest increase of 3.2%, according to eMarketer. And while traditional department stores struggle, the number of dollar stores increased by 58% to 29,400, and many supercenters, like Walmart, saw 76% unit growth.
According to the latest forecast from eMarketer Retail, U.S. retail sales “will grow 4% over 2016,” during the back-to-school shopping season in July and August of 2017. In those crucial months sales could reach $857.18 billion, which accounts for 17% of the year’s total retail sales.
So instead of buying black in mourning for the death or retail, maybe try buying into the idea of the shifting retail environment. See online shopping and e-commerce not as an enemy to retail, but a tool for the exciting and growing industry.
E-commerce companies like Amazon and Peloton are opening brick-and-mortar locations to better engage with customers and understand their patterns. Online still drives the majority of sales, but retail locations give people the opportunity to experience items firsthand. Take Amazon’s acquisition of Whole Foods. Most interestingly is why: As many have speculated, including the Wall Street Journal, data played a huge role.
Further evidence of a retail evolution is seen in the approach Westfield Malls is taking. Westfield created an innovation lab to marry digital and physical, providing retailers with the tools to test and learn. While there is still cause for concern, some malls may be seeing a resurgence. Take the Arcadia Mall in Santa Anita, CA. Analysis of this Westfield mall, near Los Angeles, shows a revitalization over the past few years of drive by new restaurants and new “experiences.” Using mobile location data, UberMedia found direct correlation between traffic and the opening of new restaurants, specifically Din Tai Fung. Not only were more devices seen at the mall, in looking at the Asian demographic specifically, visitors were drawn from an expanded radius, coming from places like Glendale and downtown L.A. The data also showed a very strong increase in lunch crowd traffic year over year, both during the weekday as well as during the weekend.
For those who deny change, the future is bleak. But for those who embrace the shifting landscape of retail, there is great hope and even greater prosperity. Just look at the data.