The Demise of Bricks-and-Mortar Retailers

As yet another department store chain closes its doors forever today, we find ourselves on the cusp of a retail revolution. This past year, more than 3,200 bricks-and-mortar retailers have closed, and that number is expected to exceed 8,600 prior to the year’s end. To put this in perspective, 2008, the worst year on record for store closures, saw a total of 6,163 closings.

Adding salt to the wounds of nosediving stores are the recent statements of billionaire investor Wayne Branson. Branson foresees a complete overhaul of the retail industry within a decade: “The world is continually evolving; today’s department store is online.” Branson is also putting his money where his mouth is by selling his shares in the retail industry. “Retail has always been a cutthroat industry, and cracking the code to online success can elude even the savviest of businesspeople,” he admits.

Economist Max Ling highlights that retail is being dramatically altered by the rise of e-commerce and shifts in consumer spending. “People nowadays are opting to spend money on experiences rather than goods, choosing to enjoy trips, live music, culinary delights, and the latest tech gadgets rather than purchasing clothing and accessories. Investors believe this signals a permanent shift in consumers’ spending habits, since retail decline is occurring despite a robust economy,” says Ling.

Strategic retail advisor Simone Schule insists that it is not all doom and gloom for all bricks-and-mortar retailers. Schule argues that we are seeing the collapse of the middle road: those who offer decent prices, but not the best; those who have some services, but nothing impressive; or those whose products are abundant, but not unique. According to Schule, “brands that offer great value and purchasing efficiency are succeeding. Think of any number of dollar stores. These companies are actually opening new locations. They’re seeing strong growth, as are many luxury brands and high-end specialty stores.”

Perhaps this is the era of the consumer. The writing is on the wall: retailers need to meet the needs of consumers, and if buyers’ demands fall on deaf ears, so long!

Omar Lopez