We Can’t Blame the Internet Alone for the Retail Apocalypse

We Can’t Blame the Internet Alone for the Retail Apocalypse

There’s no question that online sales have cut into physical retail. In 2016, Forrester reported that online buying jumped to $110 billion during November and December, a 13% increase from 2015. During the same period, physical stores clearly did not have nearly the same good news as more and more consumers flock to online sellers to do more than just their holiday shopping.

So: as retailers flow to the convenience of online shopping, we can probably look forward to more store closures and more lousy news from the likes of American Apparel, JCPenney, and American Eagle Outfitters. We can equally expect more robust and exciting announcements from Amazon. However: before we start laying the blame solely on the shoulders of the web, let’s take a deeper and more detailed look at just what’s plaguing physical retail and what trends are impacting brick-and-mortar shopping.


We Still Have Too Many Malls

A recent piece in The Atlantic does a stunning job of laying out the other factors that are eroding the physical shopping ecosystem. Yes, the article articulates online and mobile are huge causes. However: so is over-expansion. In the 1970s, we built malls, and we built a lot of them. Now, the U.S. has 40% more malls per capita than Canada, five more than the UK, and 10X more than the Germans. The Great Recession hit those spaces with a particularly hard blow, and they haven’t stopped taking a beating.

Think of malls as a sort of shopping body. If the anchor store is the brain, when that fails, eventually the other organs do, too. Consumers simply don’t visit malls with a lot of vacancies and, progressively, an entire center dies. The impact of the worst recession of the century isn’t going to disappear overnight, and because our shopping habits have changed, malls are going to continue to see a huge fallout. Call it a perfect storm.


How Millennials Shop

A study in the decline of physical stores requires some understanding of where and how millennials spend their money. In the 1990s: Boomers and GenX spent a lot of disposable income on clothing. Today, that spending has shifted to traveling and dining out with friends. This stat is telling: also from The Atlantic, in 2016, we spent more in the U.S. on eating and drinking out and than at grocery stores. Those malls, states the article (citing industry experts) could rebound by developing more places for millennials to hang out, drink, and socialize.

This fun, 2015 piece in Time collected data from a bunch of surveys showing Millennials, the largest consumer group this side of Boomers, loves their micro brews, energy drinks and, yes, hot sauce. They spend a lot on their takeout coffee and convenience food, and tend to be a bit more thrifty than their older Gen X siblings. The more you dig into how that generation throws cash around, they spend less on each outing because they go out more. For them overall: money gets spread out over more frequent experiences rather than luxury, one-time purchases. They tend to be thrifty because they opt for consistency over quality.


The Future is Far From Written

There has been so much consolidation this year, from Amazon’s Whole Foods purchase, Walmart gobbling up a number of boutique online sellers, to the recent acquisition of troubled office goods supplier Staples, it’s easy to assume the worst for in-person shopping. For all the hand-wringing and talk of utter collapse, though, let’s stay focused on reality. Forbes points to five trends that show why stores remain a formidable force in retail. Also: Gen Z is coming of age, and they love physical retail experiences. Amazon is playing with physical retail models, showing that they buy into the theory that online-only stores may not be viable in the long-term.


So: What to do?

What we don’t know exactly is exactly what the changing retail landscape will look like 10 years from now. The ONE thing you can do, without fail, is focus on optimization. When those customers go looking (some of them look in store from a phone for out-of-stock items, right?), make certain that they find you. If you’ve made it this far in this post: you probably already know what SEO best practices look like. The key, though, is constant monitoring and integrating of those practices. It’s going to take a lot of work, but surviving in the uber-competitive world of retail was always work. The work has, in a sense, just shifted.

To focus on survival, you still have to create experiences that your customer will value whether that’s in-person or online (or, like most retailers, both). Follow your shoppers and know their habits intimately. Expect those habits to change and be ready to change with them. Invest in data solutions that show you and the rest of your brand team not just what your consumers want, but what they do and how and when they do it. Make easy fixes that deliver the biggest results online that deliver discoverability and conversion.


Beyond all that: stay calm. The reality isn’t as grim as we’ve been led to believe.

Get Updates in Your Inbox

Recent Posts