If you are a regular reader of the Retail Pick Me Up, you probably know we have always stood against the catchy, but we think largely reductionist and inaccurate narrative of brick-and-mortar retail dying. We live in a world where the media is fighting for clicks, and so every snowstorm has to be a snowpocalypes or even a bombogenic cyclone (which apparently is a really scary name for four inches of snow and mild, 20 mph winds).
So with all the retail store closures and bankruptcies, it was certainly a convenient opportunity to declare the sky was falling. But is it? Over 90% of retail is still brick-and-mortar, and eCommerce is only slowly eating away at that.
In fact, Fung Global just released some research saying that retail may be on the rebound. Their key points included:
So what's emerging is a much clearer story. Retail has been actually strengthening for years, growing at over 4% CAGR for the past decade. It's just that some areas are being particularly hit, and in this case, it's apparel, electronics and department stores.
Meanwhile, there's a battle brewing in the grocery industry with Aldi opening up 900 more stores, Kroger looking to partner with Overstock and Alibaba, Walmart making waves with a partnership with Japanese Rakutan and of course, Albertson's buying Plated, Amazon's acquisition of Whole Foods and investment in Amazon Go. It would be hard to for people to argue the grocery sector isn't heating up, in part because it's such a frequent customer touch point.
What is clear is that the winners in this market are making a big bet in the way the retail experience needs to change and how we think about stores. Walgreens is a great example. On one hand it is closing 600 Rite Aid locations because of consolidation and density, and on the other it's hiring 300 technology engineers to reimagine the rest of the locations. And of course Albertson's just announced the purchasing of more of those Rite Aid locations.
So get ready retail. 2018 is the year that we shed the sensationalist headlines and get back to the hard truths and the hard work that accompanies it. We have a mandate to make brick-and-mortar more relevant, entertaining, enjoyable and profitable and we are going to need new models, processes and technology to get there. It's going to be an exciting year!