Online or InStore Shopping?
By National Mattress | 09.20.2017
"Insight into the Fast-Growing Industry of Mattress Sales"
While brick-and-mortar stores continue to face the pressure of the growing e-commerce market, it turns out that looming threat of a "retail apocalypse" may have been over-exaggerated. IHL Group, a global research and advisory firm for the retail industry, recently published a report that provided a much-needed new perspective on the so-called crisis. Though a wave of major chain store closures has caused plenty of concern in recent months, IHL Group’s research found that they were actually off-set by an increase in store openings. According to the report, there was a net increase of more than 4,000 retail store openings in 2017 - that means that for every one company closing a store, 2.7 companies were opening them. So what does this mean for the future of the retail industry?
The report goes on to explain that this uptick in store openings is true across nearly all categories of retail stores - even those that have seemingly been hardest hit by financial uncertainty. While both Sears and Macy’s made headlines for their plans to shutter more stores in the coming year, the department store category as a whole actually remains relatively stable in terms of closures. In fact, only 15% of department store brands have seen a net decrease in stores this year, while 43% are holding the number of store locations steady and 42% are actually opening new stores. More importantly, the data shows that consumers are not abandoning brick-and-mortar shopping. According to the report, 80% of consumers say they are "visiting stores as frequently or more frequently as they did last year." And while anecdotal analysis may have chocked those numbers up to older consumers sticking to their habits - the report actually showed a staggering amount of younger shoppers are still shopping in stores. In fact, 85% of Millennial and Gen Zers—the so-called "digital natives"—also reported visiting physical stores as or more frequently than last year.
This report does more than just assuage some of the anxiety swirling around the retail industry. It reinforces how important it is to look to the real data when making business strategy decisions. While industry chatter and second-hand buzz can be grounded in some truth, it also has the tendency to zero in on only the worst-case scenarios.
"When you look at individual sectors, businesses or regions, there are clearly areas that are challenged. The fallacy occurs when one looks at those exceptions and extrapolates them to represent the norm," explained Mark Mathews, VP of Research Development and Industry Analysis for the National Retail Federation, "What remains clear amidst all this noise is that the store is as relevant and important a part of the retail experience as it ever has been."
Of course, this doesn’t mean that retailers should just sit back and rest on their laurels. E-commerce sales are still growing—and it looks like more and more Silicon Valley players are looking for new ways to "disrupt" the retail concept. Even though yesterday’s launch of the (insensitively-named and poorly-conceived) Bodega was met with almost immediate backlash online—its very existence signals that there might be more like it percolating on the horizon.
While the retail industry may not be in crisis mode, it is definitely in a period of transition. Smart retailers will take IHL’s findings as an opportunity to assess their standing in the marketplace: take stock of what’s resonating with consumers—and, more importantly, what’s not. By gaining a more realistic perspective of what’s going on in the industry, retailers of all types can better prepare for that so-called "retail apocalypse" (if and when it ever comes).