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The New Retailer Imperative: Adapt to Survive |

The New Retailer Imperative: Adapt to Survive


Recently, I met with some very smart people who insist that Amazon and maybe Walmart will be the only major retail players still standing in the next 10 years. They believe that the only companies that worth investing in are Amazon, Apple, Google and Microsoft. Their dominance would overshadow anything else in retail according to my friends.

This is a rather strong assertion. Yet, in support of this statement is the new report by Moody that lists 24 store chains that may soon declare bankruptcy. The list includes Quicksilver, Bon Ton (company has declared bankruptcy last week), Cole Haan, Charlotte Russe and Peek, Charming Charlie, J. Crew, Claire Stores, David’s Bridal, Eddie Bauer, Savers, Fairway, Gymboree (company has also declared bankruptcy), Neiman Marcus, 99 cent only stores, Nine West, Sears and Kmart, Toms Shoes, True Religion Brand Jeans, MAG Retail, Totes, Tops and Vince.

While this talk has affected my thinking, I am not that pessimistic and do not believe that retail is dead nor that these companies will disappear. Rather, I see glimmers of what a changed future can look like. I look at Best Buy and see a brick-and-mortar retailer fighting Amazon with competitive prices and outstanding service. Best Buy is cutting costs so it can stay on the competitive edge. Their Geek Squad gives excellent service.

Then, I look at Home Depot and see a company that advises on color and solves problems for the do-it-yourselfers (DIY). Or, I look at Ulta giving expert advice to fashion conscious women and Zara (Inditex) associates guiding customers to their best fashion look. So, knowledgeable service can drive stronger business; it is a must for trendy retailers to remain in step with customer demands.

Maybe wearables can be bought on the internet at 11 o’clock at night. And, certainly, replacement purchases can be made at night. However, the customers who want to create a fashion look for themselves or their home still want to try it on, feel the fabric and have opportunity to ask a savvy sales associate to confirm their choice. So, despite a trade-off of sales to the internet, many people still rely on stores.

There clearly has been a major shift in retailing to the internet. In 2016, online retail sales excluding car, fuel, restaurant and bar sales rose to 11.7% of total retail sales according to the Department of Commerce. At the end of this year, I estimate that number will rise to 13% to 14% of all retail sales. It is likely that online sales will accelerate for hardlines such as bedding, small appliances and housewares, as well as for toys, fashion and food.

And, there is no doubt that Amazon is a huge factor reshaping this shift. It accounted for 41.6% of those 2016 online sales. I recently called Amazon the 800-pound gorilla that is dominating the retail scene. Many shoppers trust Amazon and often go directly to shop on the site. Its spectacular growth has been driven by electronics, home and apparel categories according to Slice Intelligence. Electronics alone were responsible for 18% of the company’s sales growth, as the number of U.S. households that own an Echo device more than doubled from 2015. The next biggest contributors were home and kitchen categories (15%), apparel and accessories (12%), food (11%), and health and beauty (10%). Their recent acquisition of Whole Foods adds another dimension to their growth. They now own a national network of brick and mortar stores that gives them access to more customers and greater opportunities for growth online with food as well.

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