For a small and mid sized retailer, it can sometimes truly feel as though the sky is falling down. Every day, there seems to be more bad news hitting the airwaves about stores shutting their doors for good, thanks to the growing online retail market. At the head of this so-called retail apocalypse is the e-commerce giant Amazon.
While many manufacturers and retailers realize, of course, that Amazon is a force to be reckoned with, it’s definitely a little intimidating to join the online giant as a vendor, which has unfortunately kept many brands from realizing the potential of an online marketplace. This has resulted in an ever-expanding gap between online and brick-and-mortar retailers – or so it would seem from many recent headlines.
Although the stories and media attention may say otherwise, the numbers aren’t actually as dire as they could be for small and mid-size retailers and manufacturers. According to a recent report from Deloitte, the retail industry is not suffering from a generic apocalypse situation at all, and is instead shifting to meet the needs of the changing American consumer.
As people have steadily recovered from the 2008 recession, there is more disposable income to be had – but only for specific consumers. The gap between low-income and high-income households is rapidly expanding, and the middle class, which was once a valuable component of understanding how retail trends work, is nearly nonexistent. The Deloitte report makes the observation that as this income gap expands, so does the retail gap between brick-and-mortar stores and online shopping. While 52% of high-income consumers shop online, 58% of low-income consumers shop in-store.
Keeping these consumer details in mind, retailers are still in the midst of an exceptionally positive time period. Customer confidence in 2017 was the highest it’s been since 2000, and overall retail sales are slowly but surely increasing. Consumers are still out there shopping in stores – it’s just a different type of consumer than many retailers are used to.
As far as store closings are concerned, there are actually more brick-and-mortar stores being opened than shuttered – in specific economic conditions, of course. The aforementioned gap in income and the retail habits of the new consumer economy is readily apparent in recent store openings: Deloitte reported 263 price-based (or budget) store openings between 2015 and 2017, and 109 premier (or luxury) store opening during the same time period. Again, it’s the middle class that is not represented in the data: 108 balanced (or mid-priced) stores closed in the past two years. At the end of the day, it’s still a brick-and-mortar world out there (online sales still represent just 9% of all retail), but even this gap is becoming smaller and smaller.
While physical stores contribute almost half of all retail growth, the projected numbers associated with online sales should make any growth-focused retailer or manufacturer sit up and take notice. Stores' are projected to grow 1.7% over the next 5 years, while online sales are projected to grow a whopping 11.7% in the same time period. The dual importance of both of these channels is critical to any brand looking to grow and expand sales to new audiences while continuing to serve loyal customer groups.
Now, understanding the importance of a brand’s presence both online and in brick-and-mortar stores, companies can work to develop a strong multi-channel retail strategy. When it comes to growing a brand presence online, the king of e-commerce is still Amazon. For many small and mid-size retailers, working with Amazon poses threats to a brand’s story, messaging, and branding. Fortunately, there are many ways brands can customize content on Amazon, which can serve to bridge the gap between the online experience and the brick-and-mortar store. From product variations to photos to optimized content, brands can truly take an in-store experience online to appeal to customers.
Getting up and running on Amazon can also be a daunting process from a time, resource, and financial perspective. While there are setbacks to the online marketplace, brands just can’t afford to ignore the online opportunities any longer. With different options and solutions available, Amazon makes it easy for brands to at least have a place online to connect with consumers. The optimization and growth will come later, with the right tools and partners in place. Retailers and brands looking to remain competitive in the changing world of retail can’t just choose one channel over the other – multichannel retail is the new face of the industry.
No matter what the headlines say, retail isn’t going through an apocalypse – it’s going through a complete transformation, and the innovative brands who embrace the change will be the ones who are successful on the other side. With a single partner online seller like SupplyKick, your brand can streamline online selling to increase conversions and, ultimately, revenue. Let SupplyKick handle all of your online retail needs and logistics – from storage to shipping to listings to working with Amazon – so you have more time to focus on your physical store and valued customers. Get started with SupplyKick today.