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The coronavirus pandemic has accelerated many retail trends, and there’s one in particular experiencing something of a revolution: the vast amount of retail space that exists.
There was a time when we measured retail success not by the experience or the delivery capability or even availability but by the number of store openings.
Around the world the chains became bigger and bigger, opening more and more stores. But to understand this trend, and subsequently how we became over-retailed, we need to take a look at the evolution of physical retail itself.
A large department store often anchored a mall with a cluster of additional stores around it. Sound familiar?
Designers envisioned the mall as a cultural and social center where people could come together and not only do their shopping but also make an activity of it. Not long after there were more than 4,500 malls across the United States, accounting for 14 percent of all retail sales. Big box stores followed.
“We can largely map the evolution of retail decade to decade. But as we know, all that changed seemingly overnight.”
But then in the 1990s e-commerce started to emerge. Little did we realize that an online bookseller would become a global titan. In the United Kingdom, the Office for National Statistics (ONS) reported that by June 2020 online sales as a percentage of total sales exceeded 30 percent — and we continue to see tremendous growth heading into the holiday season.
As we look ahead to 2021, it now appears that social selling via live streaming is the next big trend to leave its mark on the industry.
We can largely map the evolution of retail decade to decade. But as we know, all that changed seemingly overnight. The COVID-19 pandemic has dragged retail into a new, unknown world.
This is a world where floor space by itself doesn’t guarantee success. In fact, it can even become a hindrance, weighing down a retail business and preventing it from being agile and flexible.
For example, B. Riley’s Scott Carpenter said that 30 percent of current retail space "would cease to exist in its current form, as consumer buying trends shift increasingly online."
But while retailers rush to shed themselves of physical space, too few are considering the new role of the store. The danger is that many physical retailers will over-rotate, shedding potentially valuable assets to weather the pandemic and beyond.
“The line between online and offline sales is blurring. The customer journey that concludes with a sale in store could very easily have begun online and vice versa.”
That’s because the cost of a store is easy to quantify; it’s rather more difficult to calculate sales attribution, revenue-generating ability, if you will, of a store.
The line between online and offline sales is blurring. The customer journey that concludes with a sale in store could very easily have begun online and vice versa.
The fact is that most retailers still view their stores as existing to sell “stuff” and believe their very existence should fuel a sales-first model.
We need a seismic shift in thinking to tap into a mindset of retail providing access to brands, not just sales.
Now is the time to embark on such a transition … before it’s too late.
Longitudes explores and navigates the trends reshaping the global economy and the way we’ll live in the world of tomorrow: logistics, technology, e-commerce, trade and sustainability. Which path will you take?