Can traditional stores survive the online onslaught?
U.S. retailing, an industry that employs one in 10 American workers, is experiencing a profound disruption. A combination of technological change, massive overbuilding and a seismic shift in how consumers shop has created what one business writer called “the retail meltdown of 2017.” The relentless growth of Amazon and other e-commerce sites has taken a huge toll on traditional outlets: Since the start of the year, 2,800 stores have gone under, taking 55,000 jobs with them, and retail bankruptcies are up 31 percent. The stores filing for bankruptcy protection include well-known brands such as RadioShack and The Limited, and even bigger names – Sears, J.C. Penney and Macy’s – are struggling to stay afloat. The outlets that are surviving, such as Apple and Home Depot, are emulating Amazon by embracing technological innovation rather than resisting it, industry analysts say.
Among the key takeaways:
Although e-commerce accounted for less than 12 percent of all retail revenue last year, it grew more than 15 percent, while overall retail revenue rose by less than 4 percent.
In addition to shopping online more, U.S. consumers are spending less on clothes and more on food and travel.
The decline in retail employment will likely hit women and lower-income workers especially hard, because they hold a large percentage of the most threatened jobs.
Resources for Further Study
Beckford, Mahogany, “The Little Book on Big Data: Understand Retail Analytics Through Use Cases and Optimize Your Business,” Amazon Digital Services, 2016. A digital marketing specialist reviews business analysis methods, techniques and tools, using case studies from business startups to illustrate her points.
Dart, Michael, and Robin Lewis, “Retail’s Seismic Shift: How to Shift Faster, Respond Better, and Win Customer Loyalty,” St. Martin’s Press, 2017. Two retail industry experts say Amazon’s online model has become the norm in the retail industry. They also confirm that today’s shopper values access over ownership and experience over material goods.
Lewis, Robin, and Michael Dart, “The New Rules of Retail: Competing in the World’s Toughest Marketplace,” St. Martin’s Press, 2014. The authors explain how, in an age of technology and globalization, retailers need three competencies to survive: an ability to anticipate and respond to changing consumer demands; a deep connection with consumers; and control of the “value chain,” the activities taken by the manufacturer, warehouse, carrier and supplier of a product as it makes its way to the consumer.
Stephens, Doug, “Reengineering Retail: The Future of Selling in a Post-Digital World,” Figure 1 Publishing, 2017. A retail industry futurist predicts that artificial intelligence will redefine the industry and argues that Amazon’s experiments with technology will drive other retailers to greater levels of innovation.
“Sorry, we’re closed: The decline of established American retailing threatens jobs,” The Economist, May 13, 2017, http://tinyurl.com/
Petro, Greg, “Four Reasons Why A Government Bailout For Retailers Is Inevitable,” Forbes, June 6, 2017, http://tinyurl.com/
Thompson, Derek, “What in the World Is Causing the Retail Meltdown of 2017?” The Atlantic, April 10, 2017, http://tinyurl.com/
Wingfield, Nick, “Amazon’s Ambitions Unboxed: Stores for Furniture, Appliances and More,” The New York Times, March 25, 2017, http://tinyurl.com/
Reports and Studies
“Deep Dive: The US Retail Revolution Solution,” Fung Global Retail & Technology, July 7, 2017, http://tinyurl.com/
“Retail, Wholesale, and Distribution Industry Outlook 2017,” Deloitte Center for Industry Insights, 2017, http://tinyurl.com/
“The State of Retail 2017,” TimeTrade Systems, March 13, 2017, http://tinyurl.com/
“The State of Retailing Online 2017: Key Metrics, Business Objectives and Mobile,” National Retail Federation and Forrester, January 2017, http://tinyurl.com/
“Uniquely Gen Z,” National Retail Federation and IBM, January 2017, http://tinyurl.com/
Hodson, Nick, Christopher Perrigo and Douglas Hardman, “2017 Retail Industry Trends,” PwC, 2017, http://tinyurl.com/
Hortaçsu, Ali, and Chad Syverson, “The Ongoing Evolution of US Retail: A Format Tug-of-War,” Fall 2015, American Economic Association Journal of Economic Perspectives, http://tinyurl.com/
The Next Step
Bain, Marc, “Anxiety among Hispanics in the Trump era is taking a bite out of US retail sales,” Quartz, July 18, 2017, https://tinyurl.com/
Jagoda, Naomi, “Pence sells Trump’s tax-reform plan to retailers,” The Hill, July 18, 2017, https://tinyurl.com/
Mercado, Darla, “Despite President Trump’s tweet, Amazon already collects sales taxes,” CNBC, June 28, 2017, https://tinyurl.com/
Cadet, Dayana, “Millennials Going Green Means Retail Must Follow,” Total Retail, May 24, 2017, https://tinyurl.com/
D’Innocenzio, Anne, “Back-to-school shoppers look for eco-friendly clothing,” The Associated Press/The Seattle Times, July 17, 2017, https://tinyurl.com/
Vij, Vikas, “Target Aligns CSR with UN Sustainable Development Goals,” Triple Pundit, July 20, 2017, https://tinyurl.com/
Opposition to Amazon
Abrams, Rachel, and Robert Gebeloff, “In Towns Already Hit by Steel Mill Closings, a New Casualty: Retail Jobs,” The New York Times, June 25, 2017, https://tinyurl.com/
Bartz, Diane, “Retail workers union opposes Amazon’s purchase of Whole Foods,” Reuters, July 17, 2017, https://tinyurl.com/
Gurdus, Elizabeth, “Cramer: This market is scared of Amazon, and it’s fighting back,” CNBC, June 22, 2017, https://tinyurl.com/
Dennis, Steve, “Physical Retail: Definitely Different, Far From Dead,” Forbes, July 6, 2017, https://tinyurl.com/
Matthews, Christopher, “The debate over the ‘death of retail,’” Axios, July 16, 2017, https://tinyurl.com/
Wahba, Phil, “The Death of Retail Is Greatly Exaggerated,” Fortune, June 9, 2017, https://tinyurl.com/
International Council of Shopping Centers
221 Avenue of the Americas, 41st Floor, New York, NY 10020-1099
1-646-728-3800, Option 1
The global trade association of the shopping center industry.
National Federation of Independent Businesses
1201 F St., N.W., #200, Washington, DC 20004
An association of 325,000 small- and independent business owners whose self-defined aim is to level the playing field with big business, government and labor in the areas of taxes, health care and regulations.
National Grocers Association
1005 N. Glebe Road, Suite 250, Arlington, VA 22201
The national trade association representing the retail and wholesale grocers who make up the independent sector of the food distribution industry.
National Retail Federation
1101 New York Ave., N.W., Washington, DC 20005
The world’s largest retail trade association, representing discount and department stores, home goods and specialty stores, Main Street merchants, grocers and other retailers from the United States and more than 45 other countries.
Retail Industry Leaders Association
1700 N. Moore St., Suite 2250, Arlington, VA 22209
An association for retail industry leaders that conducts advocacy, education and networking.
4651 Sheridan St., #470, Hollywood, FL 33021
A global nonprofit trade association specializing in consumer behavior research, customer experience design and in-store marketing technology.
World Alliance for Retail Excellence & Standards
PO Box 650713, Sterling, VA 20165-0713
A nonprofit trade association representing retailers, manufacturers and servicing companies involved in the in-store experience.