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E-pocalypse ‘Myth’ Is Under Attack

Retail industry advocates are mounting a concerted attack on assertions that ecommerce is driving a decline in bricks-and-mortar retail, saying that this is a myth unsupported by facts.

In reality, more stores have been opening than have been closing, and more are slated to open in the near future, according to the retail research and consultancy IHL Group that was prominently cited by the National Retail Federation (AA, 9-30-17, P. 3).

Both groups discussed the research during a press conference held at Shop.org, NRF’s ecommerce trade show in Los Angeles at the end of September.

Others have joined the debate as well, claiming that the destructive power of ecommerce has been vastly oversold, causing real economic damage by undermining confidence in this vital segment of the economy at a crucial time when it needs investment most to sustain growth.

“As the ‘retail apocalypse’ canard continues to grab the odd headline in the media, the data and the facts are consistently telling us quite a different story: a story of an industry in transition, but still growing,” declares Mark Mathews, vice president of research development and industry analysis for NRF.

According to Greg Buzek, president of IHL Group, “The negative narrative that has been out there about the death of retail is patently false.” About more 4,000 stores are opening than the big chain store locations that are closing, he points out.

When smaller retailers are included, the net gain is well over 10,000 new stores, he says, noting that through the first seven months of the year, retail sales were up $121.6 billion – “an amount roughly equivalent to the total annual retail sales of The Netherlands.”

NRF and the IHL Group also don’t believe that ecommerce has been the determining factor in the widely-reported wave of store closures.

Buzek says most of these headlines can be traced to store closings and workforce cuts by just 16 major big box and department store chains.

However, a large number of the store openings IHL cites to bolster its numbers include more than 2,700 table-service and fast-food restaurants, nearly 2,000 off-price retailers and dollar stores, about 1,700 convenience stores and 674 grocery retailers — most of which are left out of the statistics cited by the NRF in its regular industry economic reports.

Buzek admits that the retail business is being transformed by a number of changes, but says this has always been the case. “When was the last time you shopped at a Kresge?” he asked. “The days of ‘stack’em high and watch them fly’ are over.”

“Don’t bet your shirt on the death of retail, or you’ll be forced to shop for a new one,” quips NRF’s Mathews.

“Consumer behavior, abetted by technology, is forcing retailers to adjust to this change at a speed that is unprecedented,” he adds. “In this sort of environment, some businesses will struggle but others will adapt and exciting new businesses will spring up to take the place of those that can’t.”

Bricks, Mortar and Ecommerce

At the Shop.org trade show and conference a common refrain among the speakers asserted the importance of bricks & mortar stores to the growth of ecommerce – and vice versa.

Several cited the example of Apple, which only sells four products, has found that its network of stores (“Temples to the Brand,” one speaker called them) to be invaluable marketing tools where company representatives can meet and talk with customers on one-on-one basis.

What they and other companies have discovered that most people still want to interact with other people, to touch products, try them on or see how they look in real life, outside of a computer screen.

In addition, this human interaction helps to create and sustain the Holy Grail of ecommerce – securing customer loyalty and repeat business.

These observations were reinforced by NRF’s new market analysis report series that will delve more deeply into consumer trends on a quarterly basis.

The initial report reveals that only 21% of consumers are primarily online shoppers. More than three-quarters of them shop at bricks-and-mortar stores as much as or more than they did a year ago.

Those who shop primarily online are younger, wealthier and more likely to live in a larger city, NRF reports. Among Millennials and Generation Z, 34% are primarily online shoppers, but the majority still make most of their purchases in stores.

“Despite the changes in our industry, there is an appeal to seeing and touching merchandise in person and being able to engage with fellow human beings that has yet to go away. Even younger shoppers see the value of the store,” says NRF President Matthew Shay.

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