With the bankruptcy of Barney’s in the news, we’re bound to see another round of handwringing in the media over the “retail apocalypse.” The actual data paints a very different picture, though. As the just-released “Retail Renaissance – A Growth Story” report from IHL Group points out, retail stores are definitely not going away. According to the report, for each company closing stores, 5.2 are opening stores. For every segment of retail, there are more companies opening stores than closing stores. Even the much-maligned department store category has more brands opening stores than closing them.
The reality is that the wave of store closures seen in recent times is being driven by a handful of companies. Just 16 retailers are responsible for 73 percent of retail store closings so far this year, according to IHL. Retail is a dynamic, fast-changing, highly competitive industry and there are no guarantees of success. Consumer expectations are growing and evolving, and retailers must invest heavily to improve the in-store experience.
In the most recent edition of NRF’s Consumer View report, two-thirds of consumers said technologies such as augmented and virtual reality, smart dressing rooms and in-store navigation apps have improved their in-store experiences. At the point of sale, technologies such as self-checkout, curbside pickup and mobile payment have made checking out an easier and more satisfying experience. The cost of implementing these technologies has been high but it appears to be paying off. If anything, stores remain an integral and growing part of the retail landscape.
According to Census Bureau data, 2018 saw a net increase in retail stores in the United States. There were almost 3,100 more stores during the fourth quarter of 2018 than the same quarter a year earlier. What’s interesting is that the increase appeared to be driven by smaller stores: Stores with fewer than five employees were the big gainer, with a net increase of 4,569 as of the first quarter of 2018 compared with the same time in 2017.
With so many billion-dollar brands that shape our retail consciousness, it’s easy to forget that retail is an industry dominated by small business: 98 percent of retail is made up of small businesses. This segment’s vibrance is encouraging because it represents the future of our industry. There might well be a small business opening its first store today that will become a dominant player in the next decade. The retail landscape 10 years from now will likely be one where stores still play a vital role in the shopping experience.
To learn more, register for IHL’s webinar “The True Story of Store Openings/Closings,” to be held on August 14.