The technology boom has not played well for physical stores as the online market took an upsurge. Online retailing sites have been increasing day by day. They offer not only fast delivery but also customization and variety of products. Moreover, smartphone revolution played a significant part in declining crowd. People are able to shop at their fingertips and pay through many different methods. The adverse effects of the growth of online shopping have been evident on physical store chains as they began adopting online way to keep customers from moving to another competitor. Along with desktop website, companies are offering smartphone applications to facilitate shopping experience for users.
The rise in online retail market has resulted in closing of stores and offering online experience. The visit to malls and physical stores dropped drastically in past few years. According to real estate research firm Cushman and Wakefield, there were 35 million visits to malls in the U.S. The number dropped to 17 million in 2013. For this drastic reduction in visits, only online shopping mediums are to blame. However, analysts have predicted that there will be more decline.
The number of people visiting physical stores in the U.K. showed a drastic decline in December 2017. Statistics showed the largest decline in the past five years. According to the research by the British Retail Consortium (BRC) and Springboard, the number of visits reduced by 3.5 percent in first five weeks of December that ended on December 30. Many regions of the U.K. indicated a downfall in visits in December. The traffic fell by 4.7 percent in Scotland, 5.2 percent in south west England, and 3.7 percent in Greater London.
BRC Chief Executive Helen Dickinson, said in a statement to Reuters, “Improved delivery options by both purely digital retailers and those with stores and an online offer mean many purchases of last minute gifts are moving online.”
The boom in online market has affected one of the largest retail stores, Wal-Mart. Recently, it announced shutting down of more than 60 stores of Sam’s Club. After announcement of increase in hourly wage of new employees to $11, it surprised the world with announcement of shutdown. Moreover, it will convert 12 of the impact stores of Sam’s Club into a fulfillment centers to provide fast deliver to online orders. The retailer took a decision based on performance review and the need to manage real estate portfolio to transform its business. The largest retailer in the world identified the importance of customers’ online shopping habits and adapting itself to run the healthy business.
The closedown of stores is not only limited to the biggest retailer. It also affected other major retailers. In August 2016, Macy’s announced the shutdown of its 100 stores across the U.S., following the similar announcements from Gap, Sears, and Abercrombie & Fitch.
The world’s biggest coffee seller, Starbucks, was also hit by the slump in physical store visits. In early 2017, the company reduced its revenue forecast for full year and outlined reduction in sales in stores in the U.S. in the final quarter of 2016. The growth of drink pickup sites and online ordering was the major reason behind the reduction in traffic in stores.
Retailers need to find ways to attract more customers to physical stores to sustain. They need to take measures to reform their store portfolios as per the changing scenario. Moreover, adapting to new technology and changing shopping habits have become necessary for stores to thrive.