The struggling brick-and-mortar retail industry

BY Samantha Mimeran / 31 May 2016 / No Comments

Retail spending around the world is slowing. According to MasterCard Advisors senior vice president Sarah Quinlan, “retail spending [in Australia] is half of what it was a year ago, so we’re on a declining growth rate”. News out of the US is also grim, with many brick-and-mortar retailers seeing drops in sales in the first quarter of 2016. Nordstrom and Gap stock fell as much as 15 per cent after posting weak quarterly results. It is speculated that decreased shopping centre traffic is negatively affecting some of the big retailers and smaller ones, too.

On the flip side, eCommerce retail is faring much better, with numbers in April in the US more than 10 per cent higher than in 2015. Technology is the driver for the increase in eCommerce growth. Where investment in technology is “natural” in an eCommerce setting, the traditional retail industry now needs to adjust their programs and strategies to keep pace.

The increase in eCommerce sales can also be attributed to Millennials, who use mobile technology to “showroom” – compare prices and products in-store but then order online. With Millennials having a projected spending power of US$1.4 billion by 2020, traditional retailers need to take note. This “showrooming” phenomenon has created a number of challenges for brick-and-mortar retailers including:

  • How to obtain an accurate understanding of a customer across different channels.
  • How to engage different customers at different touch-points.
  • How to compete with newer, more fluid business models.

In order to counter the eCommerce disruption and overcome these challenges, most traditional retailers agree that offering seamless service and providing personalised product excellence is imperative. This translates into engaging a customer with rewarding experiences and will often include the need to:

  1. Increase investment in technology.
  2. Focus on globalisation.
  3. Integrate disruptive media into the in-store shopping experience.

What is clear is that without a unique and pleasant customer experience in-store, the retail industry will struggle. Technology is the driver of success going forward – online and in-store – and it is up to traditional retail industry to wake up and keep up – or risk losing it all.


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