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The Fall of Brick and Mortar Retail?

The Fall of Brick and Mortar Retail?

Posted by Owen Barnes on Jun 16, 2014 10:10:46 AM

The Apogee and Fall of Brick and Mortar Retail?

Traditional brick and mortar retail is being shaken to its core by the cultural and technological changes of the past two decades. With the dawn of the internet age, retail firms must now rethink their business structures, sales approaches and end products. While business forecasters have been saying “retail is dead” for years, with no true collapse to validate their claims, they may be on the brink of vindication.

Most modern millennial shoppers, urban and digitalised in their habits, now prefer quick-stop shopping in smaller, more personalized stores. Gone are the days of the overbearing, impersonal and wholly time-consuming experiences of colossal shopping centres and stores - the Dundrums of this world. Instead, shoppers are looking to the convenience, selection and price advantage of moving their business online, or to smaller shops. The lean operating models of online and small-scale retailers make large retail stores appear wasteful, impractical and even indulgent. In a contribution to Retail Dive, Kelsay Lindsey argues that Millenials (18 - 33 year olds) love to shop but are less likely to make actual purchases. Familiarity with the web, economic hardship and institutional detachment, she believes, has reduced brand loyalty and in-store spending compared to the Baby Boomers and other generations past.

The Apogee and Fall of Brick and Mortar Retail?

Shoppers in stores that house electronic goods, clothes, mobile phones and footwear are showrooming more and more. This is when a shopper visits a store to check out a product but then purchases the product online from home. Internet shopping has also become the norm – 58% of Irish consumers research offline and buy online.[1] Millennials are more likely to face direct economic problems than their predecessors.  In Ireland, youth unemployment rates have oscillated between 25% and 30% since the fall of the Celtic Tiger.[2] Born and raised in financial hardship, millennials have been conditioned to search for the best prices in retail. Pew’s survey also notes that millennials tend to be less loyal to political parties and religious organizations, and less trusting of others when compared to previous generations. Kelsay believes that this disaffiliation may have transmitted itself somewhat to industry trends, with the one-brand consumer becoming more and more obsolete.

How do firms survive in such changing and challenging environments? The common theme among winning retail concepts in the 21st century is that they are as focused on providing an experience as they are on selling a product. Apple is the leader in this sphere. They offer ample space for shoppers to try out and experience products, as well as space for their Genius Bar, which creates a reason for customers to return. Stores have an opportunity to combine going back to their roots and leveraging technology to make the retail experience personal again.

The Apogee and Fall of Brick and Mortar Retail?

Consumer loyalty and trust is also not fully dead in the water. Gerard O’Neill’s findings in Amárach Research 2014 indicate that ‘Loyalty Members’ of particular shopping chains have had a positive effect upon customer retention rates. [3] According to O’Neill’s findings, the loyalty members of multiples such as Tesco, Supervalue, Dunnes, Applegreen, Topaz, Boots, Easons and Debenhams spend between 8% and 80% more than others. Innovative loyalty schemes, experience-based sales approaches and perhaps even stores geared towards showcasing can help retails ride out the recent social and technological turbulence.

No shipping speed can compete with the seconds-fast gratification of purchasing in-store, at least not yet. Physical stores will maintain a competitive edge over online competitors based solely on their ability to provide millennials what they want, when they want. So despite this period of disruption, and while many trumpet the death of retail, some clever retailers are thriving.

So, to conclude - is retail dead? Perhaps, yes, in some circumstances. But for those that know better and see the power in the medium, a resurrection may very well be underway.

[1] Amárach Research 2014

[2] EU Labour Force Survey 2014

[3] Amárach Research 2014

Topics: Insights, Retail