To preface this article, one must grasp the importance of consumer psychology. At a rudimentary level, the average consumer understands an intractable reality: your desired state of being does not gel with your current state of being. The disparity between these states drives consumer behaviour. This is otherwise known as needs recognition. Over the years, many iconic brand names peppered the scene. The likes of JCPenney, Macy’s, Blockbuster, RadioShack, Yonkers, Pier 1 Imports, Burlington Stores, Sears, and even Modell’s Sporting Goods are universally known and loved for many reasons. Brand awareness has been ingrained into our collective consciousness. Thanks to the ethos of these companies, their commitment to high-quality, and customer service excellence, we are all innately familiar with these brands.
Yet, a paradigm shift has taken place. It has been dubbed the Retail Apocalypse – a horrifying name for a grim new reality. Bricks and mortar retail operations are shutting down en masse, letting go of thousands of employees in the process. The numbers simply don’t add up. Multinational chains are closing their doors worldwide. This began around 10 years ago and has gathered tremendous momentum of late. Estimates indicate that some 9,300+ retail stores were closed in the US alone in 2019. That figure is 59% + higher than the number of store closures in 2018. Economists routinely point to the shift from land-based footfall traffic to eCommerce operations as the reason why the quintessential American icon – the shopping mall – is failing.
High Cost, Low Profit > Low Cost, High Profit
In terms of dollars and cents, it really makes sense to switch from high-cost operations (premises, merchandise, employees, insurance, vehicles, machinery, equipment, et al) to nimble, cost minimal online operations. Many retail companies blame this on Amazon, eBay, AliBaba, and a veritable smorgasbord of eCommerce operations. But many of these businesses are creating new opportunities to enter the highly competitive arena of eCommerce – Walmart, and Target are cases in point.
Indeed, the shift to eCommerce is well and truly underway. Customers around the world – led by the US – are buying whatever they need and want online. Slow year-on-year growth for land-based retail operations has been overshadowed by double-digit growth in eCommerce activity. Coupled with massive declines in in-person traffic to malls every year, and the over-supply of malls [contrasted against population growth], the inevitable decline in traditional retail commercial activity was all but guaranteed. 2020 proved to be the year where retail operations fell into disrepair owing to the catastrophic effects of the coronavirus pandemic.
