The changes in retail have been labeled an apocalypse more than once, but as I’ve said in the past – this is far more about responding to behavior changes and compensating for new expectations than it is about the death of retail as we know it.
Take for instance a great piece published in the Atlantic earlier this year that spells out three estimated factors causing disruption in the industry: the rise in online shopping, the decline of shopping malls, and a shift in consumer spending on restaurants and travel. These are all valid observations, and provide some pretty insightful data. But the overall piece misses the mark on the real prism for which to provide a concrete explanation for retail’s current decline. What it should be focusing on is experience – the experience consumers have, and how it’s dictating the change in customer journeys from start to purchase.
Retail consumer experiences have changed, as has the journey
The Atlantic piece explains how shopping malls in America are in decline, with an estimated 25% fewer in operation a decade from now. It cites how malls have been a “retail bundle” – both in design and contractually – which understandably is less potent now that consumers prefer to research purchases online or visit a physical store with a very specific purchase, thus no “foot traffic” driving revenue. It also mentions online shopping being a factor for shifting consumer behaviors to be more inclined to bargain hunt or wait for deals before making purchases. All true, and all valid contributors.
But the bigger observation is that the retail experience for shoppers has changed drastically over the last decade because brick-and-mortar was a central component of the retail strategy. Retail was always able to take full advantage of the customer journey within general business models — e. g. the maze of products you have to walk through before arriving at a register, or shelves of candy/gum/etc. above or beside the register at grocery stores. If people are visiting stores for more specific purposes only after doing research online, or not visiting stores at all, then that portion of their business strategy is now in question.
Not as true for industries like travel and restaurants. Both of those industries, for the most part, understood that the product being sold was the experience itself. Adding new touchpoints to the customer journey, like mobile or web, to these two industries just meant that the experience being sold had to begin much sooner in the process. Convenience and experience is paramount.
So back to the “great retail meltdown of 2017:” Are mass store closures and companies filing for bankruptcy protections actually signs that the retail industry is in trouble; or is this just the aftershocks of an industry catching up to others?
My money is on the latter, with the retail companies who recognize the value of experience as a currency to plot the future of their business benefitting the most in the coming years.
Interested in learning more about the impact new digital touchpoints have along the customer journey? Read our recent report ForeSee Experience Index: Digital Contribution, or contact a ForeSee representative.