Analysis Of The Reasons For The Decline Of American Physical Retailing

From the rural business district to New York Manhattan Avenue, this is a disastrous two years for the US entity retail industry.

According to the world clothing and shoe net, nine retailers have gone bankrupt since 2017, which is as much as that of 2016.

US retail giant J.C.Penney,

(Macy 's), Sears Sears (department store) and RadioShack, the second largest electrical appliance chain in the United States, have announced the closure of more than 100 entities.

The US sports goods retailer Sports Authority was liquidated and the biggest parity shoe store Payless had filed for bankruptcy.

In early April, the high-end yoga clothing brand Lululemon, women's clothing brand Urban Outfitters,

The stock of American Eagle has fallen to the bottom of many years, and Ralph Lauren Ralph Lauren has announced that it will close the Polo flagship store in Fifth Avenue, New York. There are several other retail outlets besides Ralph Lauren.

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According to the world clothing and shoe net, retailers are expected to close more than 8600 stores this year according to the current speed, which is more than the number of stores closed during the financial crisis in 2008.

"Severe financial crisis" usually explains the big disaster that large retailers are facing.

However, from the perspective of economic data, the US economy is recovering strongly: GDP has experienced eight consecutive years of growth, low oil prices and less than 5% unemployment rate.

In the past 18 months, especially for the middle and low income Americans, the rise in wages is gratifying.

So how can we explain the decline of us physical retailing?

Three reasons for declining retail sales in the US

1 people's online shopping is much more frequent than before.

The simplest explanation for the demise of the store is that Amazon is swallowing the physical retail industry.

From 2010 to 2016, Amazon's sales in North America increased by 5 times, from $16 billion to $80 billion.

Sears's department store (Sears) earned $22 billion last year, so it can be said that Amazon has increased the volume of three stores in the past six years.

More strikingly, data show that half of the households in the United States are now Amazon Prime users.

It's not just Amazon.

All along, online shopping has done well in media and entertainment categories, such as storytelling and music.

At the moment, clothing has become the most popular category on the Internet, because a simple return policy makes online shopping costumes cheap, convenient and low risk.

The success of start-ups such as Casper, Bonobos and Warby Parker, which are brands like bedclothes, clothing and eyewear, are forcing physical retailers to offer similar prices and convenient services on the Internet.

In addition, cell phone shopping is becoming more frequent.

In the past, mobile shopping meant entering private credit card information in various pop-up ads. Nowadays, because of the emergence of various app and electronic wallets, mobile shopping has become simple.

Since 2010, mobile phone shopping has increased from 2% to 20% in the share of electronic consumption.

2 the United States built too many physical shopping malls.

According to the world clothing and shoe net, the "turmoil" of the physical retail industry was planted 30 years ago.

30 years ago, physical retailing was easy to make money, and retailers scrambling to open new stores with these fast money.

This is almost the same time as the real estate market at that time.

"Tens of thousands of new stores are opened and rents are soaring," CEO Richard Hayne, Urban Outfitters, a woman's clothing brand, told analysts. "This has created a bubble, and the bubble is now disappearing like the real estate market."

The analysis report of investment bank Cowen and Company shows that during the period from 1970 to 2015, the growth rate of shopping malls in the United States increased by two times that of the population, while the study of Cushman and Wakefield by the real estate research firm showed that the number of visits by us shopping centers decreased by 50% between 2010 and 2013, and continued to decline every year.

In a detailed report on the demise of physical retail, Cowen and Company research analysts put forward several reasons for the structural decline of shopping centres.

For example, the rise of all kinds of expenses, health care costs squeezed the consumption of clothing and other products, while discount stores and fast fashion brands split the market share of department stores like Messi and Sears.

Finally, the shopping center is a "symbiotic" industrial form. Some shops have common lease terms in the shopping center, and the lease will end after the key tenants are out of business.

The closure of two stores may eventually lead to the closure of the entire shopping center.

Therefore, once the key tenants of Messi general store have problems, few brands can survive.

3 the way Americans consume is changing from "physical" to "experiential".

At present, the income of the low-income group in the United States is experiencing the fastest growth since 90s, and at the same time, thousands of physical retail stores are closing down, which does not sound reasonable.

Although income growth is good for workers and the economy as a whole, their survival is difficult for retailers, such as retail businesses, which rely on cheap labor.

Cashiers and salesmen are the two largest jobs in the United States, with 8 million employees, and the median income of these two occupations is less than US $25000 per year.

But recently, the new minimum wage standard and the tight labor market have raised the income for these poor workers. The situation of the entity retailers who are under the pressure of Amazon is worse.

Some physical stores, such as the closure of physical clothing stores, are because consumers have shifted their clothing consumption to travel and dining out.

Today, clothing spending has dropped by 20% in total consumer spending in the United States, while tourism is experiencing prosperity.

Since 2010, the occupancy rate of hotels has increased, and the number of passengers on the US domestic routes is increasing every year.

Last year, American Airlines set a record, carrying 823 million passengers.

Restaurant business is growing even more staggering.

In 2005, sales of American food and beverage services increased by two times that of other retail outlets. In 2016, Americans spent the first time in restaurants and bars than they spent in grocery stores.

There are social reasons.

Many young people will think about whether they can produce the best social media content before consumption, whether they are familiar beach photos or an avocado bread on a good plate.

Maybe this view will make you laugh, but whether you can create a good Instagram picture will really affect the behavior of people over 13 years old.

Barbara Byrne Denham, a senior economist at Reis, a real estate analyst, said it might also be enlightening for shopping centres.

Although department stores have been declining overall, better food, entertainment and even fitness choices may attract young people and family members to wander around the closed shop.

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Three "blood lessons" of us physical retail industry

Christopher Mims, a columnist and a witness to the retail sale of American entities, wrote three "blood lessons".

1 do not know how to use big data.

When Christopher Mims asked Target, Walgreens and grocery store Giant Food about loyalty programs and the use of customer purchase data, they refused to answer.

For online retailers, such as Amazon, big data is an important part of its retail revolution.

For physical retailers, big data can not only help them compete with online rivals, but also become a survival tool for them when profit margins are very narrow.

For example, Unilever will buy consumer data, which can help them determine which commodities are tight and when consumers will buy them, so as to update their inventory more efficiently.

That's what offline retailers should learn.

2 do not know "personalized customization".

Online retailers know what is popular and how customers like one item will buy other items. "Private ordering" is very common online.

The men's clothing brand Bonobos's physical store does not sell clothes at all, customers go there to try on clothes, and then go online.

(spoiler, tomorrow will send an article about Bonobos's "fitting room" function mode.

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George Faigen, a retail consultancy at Oliver Wyman, said that when online retailers were accustomed to updating inventory and prices per hour, physical retailers did not have the corresponding data and systems to follow up.

They are more likely to purchase and inventory in the annual cycle.

In order to solve this problem, some traditional retailers began to cooperate with online retailers.

Target has entered shaving products from two new networks Harry s and Bevel.

Target said that because of the pulling of these two new brands, more customers came to buy razors, and every brand, even the old brand Gillette, increased their sales volume.

In the past, new brands needed to persuade stores to buy goods to get valuable shelf space, but now they can first prove their strength on the Internet and attract shops to take the initiative to seek cooperation.

3 not well integrated online and offline.

Evans, a research firm Euromonitor, said the biggest challenge for physical retailers is how to get cash flow through online and offline integration.

Although American supermarket giant Target announced that it would spend $7 billion to refurbish the store over the next three years, investors began to sell Target stocks after it announced that 2017 profits would be 25% less than expected.

When Warby Parker, an online retailer, plans to open physical stores in the United States, the company is looking for a store selling software that can integrate existing electric business systems.

However, it did not find such a system, so it had to build a new one from scratch.

Such a system allows salespeople to know what customers are buying online and offline, so as to help them sell.

The company's co founder and CEO David Gilboa said: "this is what we call" everything. "

Even Amazon has a physical store dilemma.

In March, according to the world clothing and shoe net, the Amazon Go of the unmanned convenience store will delay landing because of the problem of selling the software system.

The co-founder of Harry s and joint CEO Andy Katz-Mayfield believe that traditional retailers like WAL-MART may not be able to overcome the difficulties even if they invest heavily in technology.

He said that selling products online is not just about accepting orders on the website.

Those successful companies are good at selling products directly to consumers. They start building technology systems from scratch. Their market teams are good at guiding online and changing market demands, and efficient offline logistics and related services. They can be integrated through technical systems, which are often not done by traditional retailers.

However, this business start-up company's judgement of the fate of traditional retailers is not necessarily correct.

A report by Merrill Lynch Securities shows that WAL-MART's electricity revenue is growing at a level of 20% to 30%.

WAL-MART spokesman said that in addition to mergers and acquisitions, the company is concentrating on the planned development of the electricity supplier industry.

It is not hard to see that today's electricity supplier enterprises are becoming entity retailers.

At the same time, their offline competitors want to embrace the online.

More interesting reports, please pay attention to the world clothing shoes and hats net.