Say sayonara to the retail industry you know.
In 2019, the retail industry had the rather unfortunate honor of leading the nation in job cuts. Nearly 80,000 retail employees were cut last year, primarily due to bankruptcies, according to tracking firm Challenger, Gray & Christmas. From in-store pickup to experience-based retailing, the industry has been slow to change resulting in a retardation of sales.
According to data submitted by the Commerce Department, back in February 2019 “non-store” sales outpaced general merchandise sales, which included everything from supercenters to department stores. Only three segments of the retail industry are outpacing online sales: food and beverage stores; restaurants; motor vehicles and parts. Understandably as all three of those segments almost require an in-person element. It was a watershed moment for the industry that reverberated through the 2019 holiday season where traditional retailers saw a huge challenge from their online counterparts leading to an admittedly weak sales report. It became the swan song of an increasingly outmoded purchasing model that is slowly succumbing to the whims of a consumer base interested in a more convenience-based option.
Retail is experiencing a very measured, ponderous death, but more interestingly it’s also contending with an entire paradigm shift. Death of an industry is a curious thing. From it, innovation is often born. It’s that unique intersection where change meets the opportunity to adapt and overcome. Modern retailing has failed to keep up with consumer demands, which resulted in the much-talked-about Retail Apocalypse.
Traditionally, retail has been centered around this idea of predicting the demand of customers based on consumer behavior or trends in the market. However, what we’re seeing is an insufficient model. Instead, of playing a guessing game, trust that consumers know exactly what they want. Instead of gauging demand, simply ask and supply it. It’s one of the few advantages online stores have over their physical counterparts. Of course, it’s much more complicated.
In the new beckoning of the retail industry, brick-and-mortar stores are not obsolete, contrary to worrisome articles by otherwise thoughtful shopping experts. Consumers largely prefer face-to-face interactions, after all. Death of industry is more symbolic about a tectonic shifting of priorities to the point the industry looks completely foreign to the way it was historically been conceived. The brick-and-mortar store isn’t dying in the way it is ceasing to exist, the concept is simply being reframed for a more modern approach.
Physical retailers were used to driving transactions, but those times are coming to a close. The shifting culture is requiring an experience-based model that aids the consumer. Amazon has been at the forefront of the retail industry (and in many ways is the sole reason for the death of the old guard). It is the prime (no pun intended) industry disruptor, so it’s no surprise they’re also positioning itself as the ferrymen to a new shopping age.
For example, the high-tech Amazon Go store is a nearly a purely experiential one that aids consumers, who have already made their purchases online, with AI-enabled software and zero checkout lines. It connects people through face-recognition software and purchases the items they choose through its connection to their Amazon account. You simply pick up what you want, or what you already bought, verify your identity and then walk out as the algorithm charges you accordingly. It’s retail for the future.
So, let me be clear about what I mean when I said the death of an industry is upon us. It’s simple: the stores Gen X and Baby Boomers have grown up loving are dying. Since the advent of the digital storefront, millennials and Gen Z have laid the groundwork for a new, modern era of retailing that doesn’t restrict the experience to the confines of four walls.
