It’s been more than two years since the notion of a retail apocalypse took hold in the mainstream media — yet we haven’t seen it arrive. Instead of the predicted demise, retail’s fortunes are looking decidedly rosy.
In July retail sales hit 4.9 percent, a remarkably high growth rate for an industry that’s purportedly in dire straits. In fact, growth this year has been so robust that NRF had to revise our annual sales forecast upward. Initially, we expected 3.8 – 4.4 percent growth for 2018; now we expect a minimum of 4.5 percent growth, and it could be a lot higher if conditions remain as strong as they are. Retail is growing faster than the rest of the economy at large, buoyed by a confident consumer and a strong economy.
Retail is actually growing faster than the rest of the economy at large, buoyed by a confident consumer and a strong economy.
Like any industry, competitive forces, technological disruption and an empowered consumer are creating challenges for some retailers; on a national level, however, business is robust. According to IHL Group’s recent report, “Retail’s Radical Transformation,” 2018 will see a net growth of over 2,000 stores. IHL’s data shows that for every retailer closing stores, two are opening stores. Some segments are doing even better: The food, drug, convenience and mass merchants/warehouse category has reported 3.7 companies adding stores for every one that is closing stores. While the lines between the digital and physical shopping experiences are no doubt blurring, stores are simply not going away. IHL expects stores to be involved in 81 percent of all retail sales in 2021.
Store closures might still be grabbing headlines, but it’s not a story representative of the industry at large. According to IHL, 16 retailers represent 66 percent of store closures. This is a fundamentally important statistic for those that conflate the problems of a few with a broader industry malaise. Stories about familiar retailers closing stores resonate with many of us who grew up in malls, reveling in the hustle and bustle of shoppers navigating from store to store. But what we don’t hear as much about are the thousands of new, innovative retail businesses springing up to take their place.
Retail is a highly competitive and dynamic industry, and technology is transforming the way we shop and connect with retail brands. As the industry reimagines itself, there will be losers — but there will also be plenty of winners. The reality is that while headlines focus on the struggles of a few, the future of the retail industry is in the successes of many.