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For a couple of years now pundits, analysts, journalists and various other retail observers have been advancing the "retail apocalypse" narrative. A typical story or opinion piece warns of the "death of the mall," points out how "e-commerce is eating the world," and generally suggests that "traditional" retailers are toast.
Alas, facts are stubborn things, as I point out in my keynote talks and highlighted in my recent Forbes article, "Physical Retail Is Not Dead. Boring Retail Is."
Recent reports from several high-profile and clearly brick-and-mortar-dominant retailers underscore the uselessness of broad statements about the future of physical shopping. Despite the supposed plague descending upon those poor sods who continue to open actual stores, Lululemon and Costco managed to drive double-digit comparable store increases and robust e-commerce growth. Same with Ulta, the beauty brand that is opening 100 new stores this year. If physical retail is dead, please also get the word out to TJX, Ross, Dollar General and Aldi, all of which continue to open significant numbers of new locations. Oh, and don't forget Warby Parker, Indochino, Untuckit, Everlane, Fabletics and many other brands that started online, only to discover that physical stores are essential to their next stage of growth—and may actually be the key to their making any real money.
Alternatively, if we look at China where, frankly, most of the really cool stuff in retail is happening, it turns out shopping behemoth Alibaba is stepping up its "new retail" strategy by opening more Hema stores and making investments in various brick-and-mortar-centric retail concepts. I wonder if those who continue to promulgate the "death of physical retail" storyline are short the publicly-traded brands in the two biggest retail markets on the planet that continue to defy their thesis?
Of course, the real issue is the foolishness of adopting a one-size-fits-all view of a huge and complicated industry. The future will not be evenly distributed and individual retail brand's mileage will vary—often considerably. What we know to be true is that in sectors where e-commerce penetration is higher than 40%—typically where the product can literally be delivered digitally, as is the case with music, books and games—most of physical retail has been wiped out. We know that in sectors where the supply of retail space greatly exceeded the sustainable demand (I'm looking at you department stores), in some cases owing to the growth of e-commerce, in other cases owing to the rise of better value propositions (off-the-mall and off-price competition), a massive consolidation is occurring. Most notably, we know that retailers that got stuck in the middle, failing either to choose to be great at price/value and convenience (what I like to call "optimized buying") or to deliver a remarkable shopping experience, are extinct or being pushed to the brink of irrelevance.
Just as misleading and potentially dangerous as making pronouncements about a retail apocalypse are those that adopt the Alfred E. Neumann position (note to Millennials: Google it) and find solace in e-commerce being "only 10%" of all retail. The impact of digital disruption varies considerably by sector, a particular retailer's cost structure and whether or not a given retailer has executed a well-harmonized omnichannel strategy. For every Nordstrom and Neiman Marcus that have captured a fair share of the shift to digital shopping for themselves and continue to grow overall in relatively mature markets, we have J.C. Penney and Toys 'R' Us that pretty much missed the boat entirely.
It's easy to blame Amazon for all of the industry's woes. But it isn't true. It's easy to say that malls are dead. Yet many are incredibly vibrant and healthy. It's easy to pronounce the death of physical retail. But then you have to explain the thousands of new stores that are opening and the dozens of overwhelmingly brick-and-mortar-centric brands that are thriving.
So those folks that go on and on about the retail apocalypse need to just cut it out. Your lack of perspective and nuance is not helping.
It is crystal clear, however, that many more malls and stores will close without aggressive actions to reimagine and reinvent themselves. Struggling brands desperately need to go from boring to remarkable. Struggling brands need to adopt a culture of experimentation and be willing to be retail radicals. Struggling brands need to stop the nonsense about channels and realize it's all just commerce, and that the customer is the ultimate channel. Struggling brands need to learn to treat different customers differently. And struggling brands need to hurry. Time is not on their side.
When this all comes together, we see the positive results that are possible. When it doesn't, there is no longer any place to hide.
