Department store chain Macy’s announced it would close 100 of its 730 stores across the US, the latest round of this year’s physical retail downsizing that has has seen big names like Sears, Kmart and others shuttering outlets all over the place.
“The reality is the United States is over-stored,” Terry Lundgren, Macy’s CEO, said on Bloomberg TV. “It’s pure facts. We’re getting in front of what we know is a trend that’s been occurring and that is customers are balancing their spending with online as well as in stores.”
While most retail sales do continue to occur in-store, the emergence of the omnichannel is reshaping the commercial landscape, forcing traders to figure out where a physical outlet fits in their business model. And what is it supposed to do.
The most dramatic shift is happening in America where there are 7.3 square-feet of retail space per person, compared with 1.3 to 1.7 square feet in Europe. A real estate consulting firm estimated that retailers would have to close 800 stores collectively in America to return to the level of profitability brick-and-mortar enjoyed in the early 2000s. In other words, there is a glut, and the omnichannel isn’t making things easier for traditional supply chains to remain competitive.
The flip side of the story is that while traditional retailers scale back their physical presence in balance with online strategies, online retailers have been moving in the other direction.
As The Guardian reported last January, around 20 online companies in the US have launched physical shops, the vast majority in fashion and apparel, in order to build customer relations, increase public awareness, create a seamless omnichannel experience and boost sales. The companies often trial a physical store with a pop-up shop, followed by perhaps an anchor store strategically located in well-known big-city shopping districts
“It’s very hard to launch a brand these days that’s just online-only. It’s an incredibly difficult and crowded e-commerce environment,” Sucharita Mulpuru, a retail analyst at Forrester Research, told The Guardian.
The physical retail space remains important, but does everyone need one? In the age of the omnichannel, the answer is yes, but ultimately it depends on your business model, and an understanding of how you make a physical store suit your customer’s needs.
The post Do You Need a Brick-and-Mortar Store? appeared first on Cin7.