Online Shopping: Ecommerce Gains, Brick and Mortar Loses

The bad news continues for brick and mortar retailers across the country – the consumer trend towards shopping online shows no signs of slowing down.

In fact, The Penny Hoarder quoted The Bureau of Labor Statistics, stating:

The retail industry lost 30,000 jobs in March and a total of 89,000 since October 2016. Around 16 million American workers staff shops, boutiques and general merchandise stores, so a dip in retail job availability has far reaching consequences.

And Clark.com doesn’t share a very optimistic view for brick and mortar retailers, either:

From department stores like JCPenney and Macy’s to smaller retail chains like Rue21 and Wet Seal, more than 3,000 major retail stores are expected to close this year.

Ecommerce provides unprecedented options

Shopping online has only become part of a consumer’s shopping habit for a little less than a decade, and yet, it’s developed the buying power to place padlocks on the doors of landmark retail locations. How did this happen, and why?

One simple reason is this: Consumers aren’t getting their needs met by offline retailers, and they’re directing their dollars to online retailers who are willing to accommodate. Let’s take a look at a few of the most common complaints

Lack of selection

In the past, offline retailers stocked their shelves and their racks with product selections that were forecast to sell, aggressively. However, this left a lot of shoppers out in the cold. There were many who had a hard time finding the right color, fit, sizes, or product models they needed and desired.

For example, Clark Howard explained that the retailers on this list are closing stores:

Because they’re not giving people what they want in terms of things like price, fashion and selection. As a result, shoppers are increasingly turning to online and discount merchants for better deals.

Clark also said:

The reality is that America has been over-stored. We have far too many retail locations, shopping centers and branches of different chains. But stores that are meeting your needs with low prices will continue to thrive.

It seems that the approach of providing shoppers with more brick and mortar locations proved to be costly. At the end of the day, shoppers didn’t need more locations; they needed more selections that appealed to their needs. They also needed to find an abundance of selection at appealing prices.

Big box killed the specialty store

Big box stores such as Walmart and Target have allowed shoppers to enjoy the benefits of one-stop shopping. And in keeping with their brand missions, the big box players have also had a negative (and in some cases, fatal) impression on niche segments of retail commerce – the specialty stores.

These are stores that sell specific commodities such as sporting goods, shoes, camping equipment, electronics, and more. A huge reason goes back to the convenience that the big box players offer, especially since these retailers are able to offer a vast variety of warehouse-to-consumer products.

In fact, USA Today reports:

Some of the biggest losers have been sporting good chains that offer broad assortments — from canoes to croquet sets. Online sellers are undercutting store-based retailers on price and options and some specialty retailers are luring customers away with upscale items.

“The marketplace for broad-spectrum sporting goods is very, very limited now,” said Larry Perkins, CEO of interim management firm SierraConstellation Partners, whose clients include struggling retailers. “Sporting goods retailers are really in the center of bull’s-eye.”

There’s no need for shoppers to waste time and gas hopping around town to find specialty items at retail stores (under hours of operation restrictions) when they can enjoy the same inventory variety by shopping online, at any time of day.

Poor shopping experiences

Long lines due to insufficient retail cashier staffing. Half-empty or cluttered shelves. Rude or dismissive sales clerks. Parking lots filled to the brim due to a lack of parking spaces. These are just a few of the reasons why shoppers are finding it easy to turn down a brick and mortar shopping experience, in favor of an online shopping experience.

Deloitte produced an article after surveying shoppers. Here’s one of their conclusions about the offline shopping experience, based on customer testimonials from the survey:

With consumer power comes control. Consequently, consumers want to have control over their chosen environments. While the interviews’ focus was on understanding the reasons for purchase venue preferences, interviewees couldn’t resist sharing why they disliked or chose to avoid certain venues. What don’t consumers like? Malls, unfriendly or “snobby” salespeople, and big or overwhelming spaces (see figure 10 for additional examples).

eCommerce Royalty

Then of course, there’s the online retail king, Amazon. Even as Amazon ventures out into new industry niches, it will always dominate its core offering, product sales and fulfillment. But there’s another eCommerce player that’s giving Amazon a run for its money: Jet.

Jet offers many of the same products that Amazon sells, but Jet has differentiated itself by offering a variety of payment and delivery options that allow shoppers to save money on their final purchase bill.

Either way, there’s no brick and mortar retailer that could begin to compete with these online giants. In the constantly shifting world of ecommerce, it’s either adapt and evolve or go extinct.

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Tagged brick and mortar, consumer, eCommerce, online shopping, retail, retailer