Pattie Lovett-Reid: The retail landscape is changing – not dying
The bankruptcies in retail have been staggering in 2017 and thousands have lost their jobs. Yet when you look at the economic data points in Canada, and the strength behind some of the key drivers such as employment, GDP, low inflation and low interest rates, they all support a strong retail environment. And to be fair, retail spending has been modest, but it has continued to grow steadily even as the landscape shifts.
The rise of e-commerce and the oversupply of malls is changing – not killing – the industry.
We are still buying, just more of our buying is done online. The likes of Amazon is one of the explanations analysts blame on the demise of bricks and mortar. However, online shopping hasn’t just surfaced, it has been around for a while.
As the categories have expanded, easy return policies and free shipping have made online shopping cheap, easy and risk-free, while making the experience more user-friendly. Consumers are doing their homework online, so there are less trips to the mall and less impulse buying, which means there’s less need for retail locations.
The big-box store was in vogue back in the 1990s. One-stop-shopping so to speak worked well for a period of time. That was then and this is now. Times have changed.
“If you look at how my parents – my dad in particular – shops online, he really still struggles with it,” Peter Misek, partner at BDC IT Venture Fund, said in an interview on BNN Wednesday. “How I do and then you look at my children – it’s unbelievable. My kids’ idea of going into a store is only to pick something up. The idea that they walk around a mall to actually browse, they don’t do it.”
Big brand names are costly, while bargain hunters and discounters rule the retail environment. We are also seeing a shift from being materialistic to more experiential. Our dollar spend is more focused on spending time with family and friends, travelling and dining out.
What’s booming is airline travel, hotel occupancy and social media, to name a few. Sure you might question social media, but report after report suggests millennials will think through the best experience to showcase on a social media platform. That could be anything from the perfect sunset to avocado toast.
Department stores are no longer the focal point of malls being replaced by food, entertainment and even fitness. This is also going to have an impact on jobs and more and more in lower retail paying jobs find themselves looking to alternative industries.
This shift doesn’t mean the splashy retail showroom is done. There will still be a place for stores but the composition of our retail spend is changing and changing fast. The retailers quickest to adapt will command the consumers attention and dollar.