Retail is splitting in two ?
“Everything gigantic in American [retail] is about to get smaller or die.”
James Kunstler, wrote that in 2013 in Business Insider. He said big retail was on the brink of a scale implosion. At the time it seemed a little outrageous. When I’d quote it in speeches, I’d couch it by calling him a “contrarian economist.” (Which he is, but that doesn’t mean he can’t be right. And I went right on quoting him.)
Finally, others have caught on to the story. The Washington Post just reported that the troubles in big boxes are coming to a boil. It has been building for years and is now arriving full force. They even give a hint of the big split: shoppers are moving online and embracing smaller, niche merchants.
We all know the storyline about online retail taking over sales from big boxes because that’s the story that the news is focused on. And I think it’s true, especially for all boring, routine purchases that can be easily automated to the point we never even think, but they just happen. (Like Amazon’s Dash buttons or subscription services that make automatic recurring deliveries of basic needs. Or your refrigerator noticing you’re low on juice and ordering it for you.)
But not all retail sales are going to move online. Keep in mind that in 2016, online sales totaled only 8% of all US retail sales. Where will the rest of retail sales go, if not online? And what kind of sales will they be?
This is where small local stores come in. If boring purchases get automated, that leaves the interesting retail. Think small, sustainable, curated, handcrafted, local and meaningful. Those are the things we’ll still shop for in person.
IBM Research says that in five years, buying local will once again beat online, at least for the interesting retail category we just talked about.
They say the smart local stores will merge digital with physical retail. The physical store is close to customers, and gives immediate gratification. Merge that with the product information and reviews of online, plus the data to be more personalized, like wishlists and recommendations. Local stores will bring the web right to where the shopper can physically touch it.
To really capitalize on this, small local stores will have to embrace some modern technology, giving customers an immersive, mixed real and virtual experience. JWT Intelligence calls this a blended boutique experience.
What do you think? How do you see the retail sector falling out for small towns?
Keep shaping the future of your town,
PS – I tell you these outlandish stories to keep you thinking about the future and open to new ideas. It’s part of my ongoing Idea Friendly campaign. You can still watch the replay of our Idea Friendly webinar here.