Survey Says SMB Retailers Will Give Up Physical Stores within Decade
June 20, 2017 | Contributed by: Greg Sterling
Much has been made of retail store closures and layoffs. Many in the industry are referring to this as the “retail apocalypse.” Now, a survey of 200 small businesses from GetApp argues that in a decade physical stores (for these respondents) will be gone.
The survey of “over 200 US-based business respondents, who run both an online and physical store,” found that roughly 66% believed their businesses would be conducted entirely online “within 10 years.” Less than 5% believed that it was “extremely unlikely” that (their) physical stores would be gone.
It’s safe to say this directionally represents the prevailing view, which has been growing. However I strongly disagree. While many large US retail chains are inefficient and burdened by legacy systems and processes and offer a lackluster store experience, a dual online and offline presence is critical for success and longevity.
Here’s a challenge: how many online only retail brands can you name? My guess is that after Amazon (and maybe eBay) you’d be lucky to get to five. Celebrated online retailers, Warby Parker and Bonobos moved offline several years ago. The latter just sold to Walmart for more than $300 million.
Moving offline provides a range of advantages for the brand and consumer experience, provide it’s done smartly. Witness Amazon’s various efforts over the past several years to move into physical retail — capped this past week by its nearly $14 billion dollar bid for Whole Foods. Conversely, most brands that are digital only are less likely to endure in the market. Feel free to dispute that proposition but I believe it to be true.
Malls and retail are overbuilt in the US. Growth was historically driven by adding more stores and real estate. The internet and Amazon have disrupted that but it doesn’t mean that stores are outmoded or done, as the survey suggests.
Rather than online only, the successful small (and large) retailer of the future uses both physical stores and multiple digital channels to promote and fulfill. The historical problem with traditional retail and its e-commerce divisions is that the online stores were pitted against offline and the two didn’t work together for the holistic benefit of the customer experience until comparatively recently.
Generation Z shoppers prefer stores to online. And stores support e-commerce because they give people confidence to buy online, with the option to return locally.
So while the market is currently in a “correction,” stores are not going to disappear. And those retailers that can manage both online and offline in a complementary way are ultimately going to win vs. the vast majority of online-only sellers.