As we approach the half-way point of Amazon Prime Day, it’s worth noting that despite complaints of website outages, millions of sales are continuing to drive Amazon’s bottom line.
While Amazon is enjoying millions of sales, traditional big box stores around the country continue to struggle as changes in consumer buying habits continue.
“We’re seeing an evolution in retail,” said Janell Townsend, professor of marketing at Oakland University. “The way we shop is going to continue to change over time.”
Townsend said it’s too simplistic to blame Amazon for the mass closings of stores across the United States, but said they’re part of the equation.
Whether it’s Amazon, eBay, Overstock.com, Walmart or any other major player in the online purchasing game — the reality is more and more people are turning to online retailers to purchase products.
Townsend said that traditional retailers are hurting because of the overhead costs of space and stocking large amounts of inventory. She believes the key to keeping businesses open is shifting to a more “experience-driven” shopping model.
“We’re definitely seeing an emergence over time of more and more of those types of businesses,” said Townsend, pointing out that businesses like Ulta are actually seeing increases in sales. “But we’ll still see big box, at least some of the big box stores, go away because they can’t figure out how to make it work.”
Toys ‘R Us is one of the most recent failures that come to mind. The chain recently liquidated all of its stores across the entire country. Other large retailers like K-Mart, Sears and JC Penney have been struggling and shuttering stores as it tries to shift its business model to stay relevant in an ever-changing marketplace.
Earlier this year, S&P Global Ratings released a list of 20 businesses that were at risk of closing in 2018. Among the retailers listed were well-known brands like Sears, J. Crew, Neiman Marcus, Payless Shoes and more. Some businesses that made the list, like Claire’s and Bi-Lo, have already announced bankruptcy mere months after the list was released.
However, that doesn’t mean brick and mortar stores will become dinosaurs. Townsend believes that until online retailers can deliver must-have items to your doorstep within hours of purchase, the need of physical stores won’t go away.
While drone technology is still being researched by groups like Amazon to bring more immediacy to filling orders, it’s not ready to be implemented in the short-term. That leaves a need for plenty of niche shops that don’t require huge amounts of inventory. Townsend also pointed out that more stores are shifting to a showroom model with less inventory on-hand, but offers the ability to test products before they’re shipped to you.
“You go, see and experience these products but then you have to wait for the things you order,” said Townsend.
