If you follow retail, there are a few ‘things’ you hear about a lot these days. That online shopping is affecting brick-and-mortar stores throughout the country; retailers such as Bon Ton, Sears, J.C. Penney and Toys “R” Us have all announced closures this year; shopping malls across the U.S. haven’t been this empty for so many years; etc. Incidentally the mall vacancy rate for this year’s second quarter is reported as 8.6% (a high not witnessed since 2012, when the country was recovering from the recession and the rate was at 8.7% source: reis.com/commercial-market-analytics).
Digital media and digital channels are a huge factor impacting the retail landscape. But there are many other factors that are responsible for these trends. Yes, online sales keep growing and chipping away at brick & mortar retail, However, eCommerce still only accounts for around 10% of all retail sales.(source:http://www.census.gov/retail/mrts/www/data)
The U.S. economy in general (70% debt-based) is to blame – consumers have lost purchasing power! Too many Americans simply don’t have the funds they once had, and too many have exhausted their credit lines. And mind you this is even though the official unemployment rate has dropped to 18-year low of 3.8%, the economy is still broken for a great number of Americans who are living a precarious existence — nearly invisible and economically marginalized. (source: http://www.marketwatch.com)
Most millennials find shopping mall very time consuming. They prefer online shopping, being able to find some of the items, not readily available in a brick and mortar. The monopoly of some retail stores is also a ‘put-off”, for example, why purchase a computer, clothes or shoes, at a specialty store in a mall, when big box retailer like Wal-Mart’s got similar items? Again, the point of visiting a mall is to go one place and shop for everything you need. The internet fills that role now, and it doesn’t help that malls are responding by increasing rents and driving business out instead of lowering them or providing other perks to draw them in.
Perhaps all malls and vacant store fronts will all one day turn into some kind of boutique service shops, personal care businesses, yoga/fitness centers, cafes, restaurants, bakeries, ice cream shops, bike repair businesses – things you can’t order online, things that apply to one personally, things to do with all your shopped online free time!
At some point brick and mortar stores will be back maybe in a different form. people still want to put hands on merchandise and not have to deal with shipping returns especially for example a thing like musical instrument say a guitar – you can have two or dozens of identical guitars specs wise but one will have just enough difference the wood will be heavier or lighter or the neck just a little slicker or just plain sounds better, subjective? yes, but very real. Clothing is similar but more forgiving shoes?
I don’t believe that everyone is buying their clothes online. That’s just not possible.
With all due respects and credits to sites like bombfell; stitchfix and trunk club, what I have seen upto now is some boring, poorly made clothing, poor quality in fabrics, lack of originality in design. Mass production of the same designs on every website. Same for the online portals of Macy or Men’s Wearhouse.
There is no specialized shops based on body type and sizes.[ Though I am quite impressed by 2 brands – Proper Clothing and Bombay Shirts who do provide a near customization opportunity]
Now, how many sneakers or jeans can one person wear? Those shoes ordered from Amazon or DSW or Zapos are awful for your feet. Everything is mainly one size one style fits all.
The reason some them are in business is that people don’t dress presentable anymore. Casuals is the order of the day -Cool! The clothing industry represents young adults and teenagers not adults.
An interesting survey (source: http://maristpoll.marist.edu/npr-marist-poll-results-june-2018-digital-economy)recently reveals that E-commerce has a much higher return rate than traditional brick-and-mortar stores do. According to Optoro, a company, which is built around returns: It helps retailers re-purpose or resell all kinds of things that people send back, shoppers returned an estimated $385 billion worth of inventory they purchased online in last year alone.
However, 91 percent of American online shoppers said they “only rarely” or “never” return things they buy online. And even more — 94 percent — said they “only rarely” or “never” make an order expecting to return at least part of it.
Then there are wrong shipments. Some fine prints do not guarantee the returns. For example, someone had ordered a $40 fuel tank for a camp stove, but instead, the company accidentally shipped an $800 5-foot cooler. “They won’t take it back!” the company apparently only allows returns for defects or warranty issues, not wrong shipments.!?!
This is certainly a unique reason for not returning an item — but that still didn’t seem to fully explain why most online shoppers claim to barely ever return things. And then there are people who don’t return items for an even more straightforward reason.
The 9 percent of online shoppers who do admit to making returns actually translates into almost 16 million adults in the U.S.In other words, a small portion of shoppers creates big headaches for stores with costly returns. And the retailers’ biggest concern is fraud: people who return items that are, for example, stolen, worn or used. Most major companies work with a designated firm that tracks the frequency and value of individual shoppers’ returns to spot fraudsters.
But some shoppers say they get caught in the middle. The Wall Street Journal has recently reported on consumers who argue Best Buy and Amazon had unfairly blocked them from making purchases by interpreting their return behavior as suspicious.
In the NPR/Marist poll, a quarter of online shoppers said they “only rarely” return worn or used items; 74 percent said they “never” do so. Only 2 percent said they make such returns “often” or “very often.”
Who are the other roughly 90 percent of online shoppers who, according to the poll, also pretty much never regret their online purchases? They are the ones who contribute to the success of E-Commerce.
Footnote : The American E- commerce should thank the liquor industry as Americans spent an average of $448 per person in “drunk purchases” per haul in 2017.
Shardul Bhatt 