Much as been written and prognosticated about concerning the future of retail, but it’s been largely based on a flawed logic, itself predicated on the failure of a few legacy brands and business models that were already well past their prime.
For years now, writers have been pontificating on the decline of brick and mortar, and the death of malls, yet most have continued to exist and thrive. What we are seeing even now is merely an acceleration of a trend that was already taking place and in many ways was long past due. No one should be crying for Sears, anymore than you mourn the loss of Orange Julius or Radio Shack.
There has undoubtedly been a shift to online shopping—yet still less than 20% of retail sales—which has been accelerated recently by the near global shutdown of retail during the pandemic. The over-expansion of retail in America was a long time in the making, so even a significant collapse of physical retail could reasonably be seen as nothing more than a healthy, overdue correction.
The reality is that America was over-retailed to the tune of nearly 24sf of retail per capita compared to an average of about 3sf for most European and Asian markets, with an overwhelming glut of mediocre brands vying for an increasingly discerning consumer. It’s been suggested that a third of shopping malls would fail in the coming decade, a third would struggle and the top third would thrive and become critical to the longterm success of global brands. That was before the economic downturn.
The evolution of the retail store has been in a constant state of flux ever since the first entrepreneur made a mark outside his cave and offered goods or services in exchange for compensation. There is historical evidence that people were trading goods as far back as 9000 BC, some form of currency was being used by 3000 BC, and by 800 BC, the Greeks had developed markets where merchants would sell their wares to the public. Yet it wasn’t until into the 17th century that retail, as we know it, became widespread.
Throughout most of the 18th and 19th centuries, independently-owned general stores proliferated in cities and small towns across America, culminating in their heyday in the late 1800’s. The family-owned stores provided a critical service to communities, offering anything not made at home at the time. From cloth and spices to dry goods and manufactured items, the general store was a central part of any community and also often operated as the post office and drug store.
By the mid to late 18th century, agriculture was replaced as the dominant economic force in America, by manufacturing and industry, bringing with them not only a wealth of new products but a new standard of living. Department stores such as Macy’s (1858), Bloomingdales (1861), and Sears (1886) opened up in cities such as New York City and Chicago, providing untold luxuries to those who could afford such things.
The 20th century saw an explosion of consumerism beginning in the post-war 1950’s that has more or less continued unabated well into the 21st century, but it’s been the last decade, with the advent of the digital age, that has provided the greatest shift in how consumers buy goods. We’ve seen the evolution of general stores, department stores, malls, big box concepts, e-commerce, and now find ourselves navigating the fractured world of social media.
Retail was destined to evolve as it always had, even more so given the magnitude of the disruption that the internet was guaranteed to cause. Amazon isn’t the cause of the disruption, just the most well-known beneficiary at the moment. So what will the future look like? No one knows of course and anyone who tells you differently is either a fool or a liar, but there are some interesting possibilities that make sense given what we know right now.
Human beings are social creatures, evolved to live in communities. We are sensory beings as well, suited to gathering input about the world around us through touch, taste, smell, sight and sound. We desire experiences, not just possessions, and we are far more driven by our hearts than our heads—much more than most people would care to admit. We are drawn to shared experiences, choosing to watch a performance, athletic event, motion picture or exhibition with others in public than in the privacy and security of our own home, even though that is increasingly possible with a greater degree of production value.
Even though we will cease to rely on brick and mortar stores as methods of product distribution, we will still want to visit immersive showrooms that present our heart’s desires in the most fashionable light. Much of retail might not change size so much as exchange its storage space for greater experiential presentation. With fewer stores, every one will be a flagship designed to sell not just the products, but the lifestyle aspects of the entire brand. Product will become almost secondary, mere accessories that you purchase to aid your quest for the ultimate experience.
Merchandise will be delivered to your door within days or even hours, from massive, regional warehouses, so there will be no need for overstock, and no reason for a consumer to lug things home with them. Retail establishments will become places to try on your new lifestyle, even if much of it becomes virtual, which will cut down on returns. This could even result in more made-to-order products, built and designed for and by you, then made on demand, eliminating waste and need to mark down or destroy product that doesn’t sell. A large portion of retail space will be devoted to personal brand associates, virtually walking consumers though the various product offerings, answering questions, offering suggestions and providing an intimate level of customer service and privacy not currently available. This may even be done from the privacy of your home or office, when you don’t have the time to make it to the showroom.
So imagine the best malls in the country, reinvented as collections of flagship showrooms, featuring the greatest brands on the planet—all with intimate service and made-to-order personalization. You will plan your shopping excursion like an event, using an app that schedules all your appointments and provides your digital dossier to the brand specialist in advance, so that they may receive you like the VIP customer you are, every time. You will leave invigorated and satisfied, all your purchases sent to your home ahead of you, all your experiences captured in digital form to be shared with friends and enemies online, all your likes and dislikes noted and catalogued for future reference.
The future of retail is changing, this much is true, but were you really all that happy with it to begin with? Store closures will offer greater opportunity for the brands that remain to expand their offerings in new and exciting ways. Shopping centers will become exciting destinations with unimaginable experiences as opposed to mere distribution centers for mediocre brands. But first we need brands and developers with the vision to embrace innovation and creativity and lead us into the future.
