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How to avoid the retail apocalypse

We all know that the internet is changing the way most businesses operate. Convenience, bigger selection, cheaper prices and free delivery are just some of the ways the internet is disrupting traditional business models.

retail apocalypse

The problem with lower prices

One of the natural reactions of bricks and mortar retail businesses to the growth in online shopping has been to lower their prices of goods and services. The two-part argument seems logical:

  1. shopping online is cheaper, and

  2. online shopping is growing faster than in physical shops, therefore:

retailers need to lower their prices to try to hold onto market share.

The problem with this rationale – is that it is simply not possible for most traditional businesses to compete with the online discounters. An attempt to do so is likely to result in low or no profits, and even more pressure on staff numbers and service levels.

Retail apocalypse

In the US there were a record number of store closures in 2017, and a growing number of shopping centres are now vacant wastelands. The retail apocalypse is a phrase that has been coined to describe the US retail closures amidst predictions that 25% of shopping malls might be closed by 2022.

Evidence of this is clearly seen in NZ retailing too with the number of chains that have been forced into store closures or liquidation. Borders, Dymocks, Arbuckles, Pumpkin Patch, Kimberleys, Dick Smith, Hardys, Nosh, Shanton, Meccano, and Topshop have disappeared – and even The Warehouse is struggling to get its Torpedo 7 chain and iconic “red sheds” into consistent profitability.

Get out of the middle

Deloitte recently published a Retail Insights report in the US which concluded that to be successful, retailers need to operate at one of two ends of the market – either premium or bargain.

The middle ground in between these two positions is steadily declining as consumers choose to shop either where they get the best value for money or where they get the best service and specialist advice.

What this bifurcation of the market means for your business can be summarised with the following key points:

  1. Being convenient is no longer enough on its own to guarantee success

  2. Being cheapest can be a successful growth strategy – but this is a difficult promise to keep as more competing outlets get into the supply of similar goods and services

  3. Being a recognised expert is a growth strategy – as consumers seek out specialist advice that they can’t get online, or from the discounters

Check your image

Our RPM consulting team find that many independent retailers are unfocused, cluttered and unprofessional. Too many stores contain an uncoordinated mixture of merchandise and novelties and their retail signage and point-of-sale ticketing is muddled or uncoordinated.

Many service-retail businesses have insufficient seating or waiting areas for customers, and the counter / advice area and consulting rooms are frequently cluttered and lack privacy. Adding to the generally poor image - many staff are not in uniform, shop lighting is poorly maintained and instore music and/or television displays are not working.

These factors all add up to an environment that is not consistent with an expert, professional business.

Compared with a customer’s experience in professional premises such as lawyers and accountants or medical centres and dentists, or the disciplined retail environment in service stations and supermarkets, many independent retail businesses are not delivering an experience that meets or exceeds their customers’ expectations.

If you want your store to be recognised for its high-quality service it is critically important to focus on eliminating the aspects of your business that are inconsistent with this positioning. By removing these weaknesses, you will find that you are more likely to attract and satisfy the growing number of customers demanding a “better” retail experience - rather than a “cheaper” one.

  1. Yahoo:

  2. Wikipedia:

  3. Deloitte: “The great retail bifurcation: Why the retail “apocalypse” is really a renaissance,” March 2018


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