Through a special arrangement, presented here for discussion is a summary of an article from Retail Paradox, Retail Systems Research's weekly analysis on emerging issues facing retailers.
With holiday online sales winding up 15 percent higher year-over-year versus more modest gains for physical stores, digital marketers and online retailers are dragging back out all the stuff they said in 2000. "The store is dead!" "E-commerce will kill brick and mortar retailing!"
I still humbly disagree with all of them: the physical store has some distinct advantages and is one differentiator that multi-channel retailers have over online pure-plays — if they can figure out how to use it.
That said, the store is still in big trouble. Here's my quick take on retail developments for 2012:
Store Closings
Stores are an enormous asset, but ultimately there are too many of them in the U.S. I firmly believe the Sears announcement is a herald of things to come — retailers will be shuttering unproductive stores in 2012 and either investing more heavily in e-commerce and cross-channel or opening new stores in new geographies. We'll also see more sub-dividing and sub-leasing store space to complementary retailers or service providers.
Big Box on the Rocks
Another place where e-commerce is taking a big bite out of traditional retail is in the big box or "category killer" verticals. Shoppers used to go to these stores because the selection and expertise were unmatched. Well, you can now find both online.
Borders in 2011 was the canary in the coalmine — a retailer whose product was especially well suited to online distribution. Electronics has long been a heavily online-driven category in retail, so I suspect the only thing slowing down this category's transformation a la Borders is the fact that much of the product still has to physically be delivered. Some category killers, in particular REI and PetSmart, have hedged, diversifying into services. I'm still waiting for someone to reinvent the grocery store in a cross-channel world.
Mobile Customer Service
A more positive development is retailers' rush to embrace mobile. While last year's push was to "have something, anything" in mobile, this year will see more thoughtful approaches; more integration. This will mean putting more capabilities in the hands of shoppers and employees. I long to see the day when having asked a store employee a question, I don't get the puzzled, helpless look and instead get a few flicks and clicks on a mobile phone for a ready answer to my question. I'm sure that store employees long for that day, too.