The Retail Apocalypse Is Here and It Will Change the Sector Forever
Updated: Apr 27, 2021
Whispers of the retail apocalypse have been around for nearly a decade. The faster that technology advances, the more competition technology has created for traditional brick-and-mortar retailers. However, the war between traditional retailers and technology seemed to have found a healthy balance until 2020 with the unprecedented arrival of COVID-19.
Back in 2019, I was a moderator at the Saskatchewan Real Estate Forum on the retail panel. My four panelists were all very optimistic about the future of the retail sector, however, they all acknowledged the need for adaptation for retailers to be able to survive. What the market was 10 years ago was completely different from what the market was then, and it is definitely very different from what it has become today and will continue to become.
Many retailers within the market have become victims of select retailers that have become disrupters within the sector. For instance, Amazon has become public enemy number one for many traditional retailers, especially local retailers; yet their presence continues to expand as they have become a convenient and cost-effective option for consumers. How many times have you walked into a local store, saw the price tag of an item, and instantly knew you could get it cheaper on Amazon? Furthermore, you really didn’t need that product today that waiting a day or two for Amazon Prime to deliver was not a problem. I’ve been there, and countless other consumers have also been there, but those consumer habits are known to impact the survival of local retailers who need to maintain higher price points to be able to pay rent, wages, and added sanitation costs due to COVID-19.
Many local retailers were struggling before 2020, that the negative impact of COVID-19 escalated many existing issues pushing local retailers to the brink of closures, and some unlucky local retailers being forced to permanently shut down operations. However, local retailers are not alone in their struggles as many national and international retailers are also experiencing similar struggles. Mid-way through 2020, it was reported that upwards of 12,000 stores across North America could close. Amongst the list of store closures included notable retailers Pier 1 (Preston West store closed), GNC (all Saskatoon locations closed), Victoria’s Secret, and the Gap. Recently it was reported that 1,000 more stores would be closing throughout North America, this time including retailers such as Best Buy, Bed Bath and Beyond, H&M, and DSW.
So is the way we know retail over? The short answer is yes, and no. Retailers are now forced to adapt to the changing times due to challenges presented by technological advancements, yet these challenges have been present for over a decade but the new need for adaptation has been forced to escalate at a rapid pace. For the past year, retail giants have explored how they can evolve their business while using technology to increase their bottom line; this adaption to their business models will come at a sacrificing their physical footprint in brick-and-mortar locations. One example can be found within the food industry as restaurants are now relying on take-out traffic for survival due to uncertainty as to how long the pandemic, which may now become endemic, will last. However, with the reliance on take-out delivery services to reach consumers, these services have come with significant added costs.
What we knew to be the retail sector is a thing of the past. The future of retail will involve more competition from retailers as they look to optimize technology to garner new consumers to their brands and services. Although many retailers will explore reducing their physical footprints, the future of brick-and-mortar locations is not dead. However, retailers that find a balance between brick-and-mortar locations and technological advancements are the ones that will thrive in the coming years.
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