Statistics support a trend in consumers changing their shopping habits. According to a Credit Suisse report in 2017, 20% to 25% of malls will close by 2022. Store closure announcements have swept the U.S., with 8,600+ in 2019 alone. It’s really not so surprising. The simple fact is that fewer people are walking the mall … at least to shop. According to one report by Cushman and Wakefield, shopper visits to malls fell 50% from 2010 to 2016.
Retail Extinction Looming? Why is the American mall dying out — or at least on a severe diet? Two dominant reasons support these changing times: an increase in online shopping and a changing population that includes a shrinking middle class and younger adults who are faced with paying off student loans and other accumulated debt.
So is retail overall dying? The National Retail Federation recently forecasted that U.S. retail sales in 2020 would increase between 3.5% and 4.1% to more than $3.9 trillion. So, no, retail isn’t dying, but it’s definitely changing!
Online shopping has brought motivators such as the variety of products available and the perceived convenience of online ordering. Revenues from online sales continue to grow. Observing the almost daily deliveries to my neighbors’ homes supports this idea. From clothing, to kids’ toys, to dog food and groceries, packages are delivered directly to their front doors. With a busy home, career and life, who wouldn’t take advantage of this convenience?
Physical Stores: Obsolescence?
In 2019 Macy’s announced it will close 30 stores by early 2020. The privately sold luxury collection Worth New York will close at the end of the Spring ‘20 season. So you may be wondering, where is retail going?
Although there certainly has been a shake-up in the offline retail industry, experts have noted that brands and consumers are settling into a new normal with stores and custom retail for shopping. At KDIC we predict an even-more seamless shopping experience will arrive. J.Hilburn Menswear is a perfect example of this — bringing quality, workmanship and lower pricing on luxury garments, all in the convenience of your home or office, and with the personal customer service of a trained independent stylist.
Nina Ivon, with 53 years in retail at Saks Fifth Avenue Chicago, shared her predictions at the 2019 Association of Image Consultants International (AICI) biannual conference. In reviewing the shifting trends, she noted that department stores and boutiques aren’t just places where people go to shop. Shopping malls, with included amenities and entertainment options, enhance the shopping experience. Offline shoppers appear to be motivated by what they perceive to be time savings, personal customer service, walking out the door with product in hand, or the recreational activities included in a shopping experience.
Why Customers Will Still Shop Stores
Customer experience futurists, like Blake Morgan, have cited many reasons why they believe customers will still go to physical stores. Here are five of the top reasons we think customers will go to stores:
• To see products in person. Many customers still want to touch and see actual items in stores before buying.
• To experience a brand. Many brands are turning their physical stores into “experience centers” that help customers better understand their products (e.g., Apple stores).
• For personal interaction. This one is simple. Humans are hard-wired to crave personal interactions, get advice and talk with others.
• For instant access to products. Picking something up immediately at a store yourself is still usually faster than delivery, and you’ll know you’re getting exactly the products you want.
• To try on items. Virtual dressing rooms can’t match the “fit and feel” of trying something on in person when shopping for clothing.
Brick-and-mortar retail stores are definitely not going away any time soon. Most people will use a mixture of offline and online shopping based on what is most convenient and interesting to them individually. Expect retailers to be increasingly asking, “What are your shopping preferences?”
