The Retail apocalypse is here. This is one statement that has reverberated in the retail sphere in the recent past. The high percentage of store closures from brick-and-mortar retailers, and the growing popularity of e-commerce certainly forced the layman to think no different. The general idea for long has been that offline retailers through their retail operations have tried their best to turn their fortunes around, but are now finally surrendering to the mightier e-commerce.
While the massive number of store closures does provide an indication, it must be understood that not all the sector is struggling. The following facts clearly drives home the point.
Amidst all the closures, there is still fair amount of Expansion happening
It’s very easy to think that it’s the end of the world for brick-and-mortar retail. Latest findings by Cushman & Wakefield reveal the number of closures is expected to reach 5000 this year. A lot of retailers are looking to do away with offline and focus on the online retail operations. However, not all retailers are too perturbed with their physical existence. In fact, if anything, they are planning a large-scale expansion in the offline segment. A recently conducted research by CBRE states that big retailers like Lidl, Dollar General, Ulta, Dick’s Sporting Goods, Target, Nordstrom, etc. are looking to expand their offline presence by opening stores. This might come as a shock to all retailers who have surrendered to e-commerce already.
The United States of America is topping the chart when it comes to global offline expansion. They are closely followed by Italian and French retailers. Particularly the food and beverage sectors of the USA, is finding it relatively easy to expand globally, owing to their strong brand establishment, and their will to expand into new markets globally. At a time when a massive amount of offline store closures has rocked the offline ambitions of many contemplative retailers, the above facts might help them reconsider their plan of action.
Record Retail Rent – Yet another year over year growth
Across the USA, the retail rents grew to unprecedented rates, marking yet another period of year over year growth. As per data from CBRE, the net asking rates averaged $16.97/SF in Q1, which is 6% higher than the previous year quarter. All segments experienced a fair amount of growth, including the lifestyle and mall segment, against all odds one might say. Even after a massive amount of speculation following the vast number of store closures, the segment registered a recorded an increase by 28% in rent, compared to the first quarter of 2016. If anything, these facts prove that there is still significant amount of power and life left in Brick-and-mortar stores. The apocalypse can wait.
Amazon’s purchase of Whole Foods: Signifying the power of stores
If all of that’s not enough, the intent of Amazon to invest in offline retail is no secret to anyone today. The concept of Amazon Go has already taken the retail world by storm. The whole idea of an online giant looking to invest in technology that will revolutionize the in-store experience of customers gives an indication of just how prospective retail stores can be. Recently, Amazon acquired whole foods for a whopping amount. The power of retail stores couldn’t ask for a better endorsement.
A lot of retailers might say that they could do anything because they are Amazon. Some part of it might be true, but what Amazon also does is invest in their faith. Now one might say that they can afford to do so. The fact is, that Amazon has just opened the doors when it comes to physical stores. The others should still take a little bit of time before completely closing doors.