The e-commerce industry has been disrupting the retail industry for years now, but the process has seen a fast-track growth in 2017. In order to survive, brick-and-mortar sellers need to adapt to creating an experience for their customers.
In the second article of this series, we take a look at developments in the retail sector in developed/developing countries…
It is being forecasted that most of the retail investments will be in the developing world by 2025. This is especially true in the case of European and US retailers, who are expanding in the developing world due to relaxed legislations; while reflecting local needs and competing in the local retail environment.
In UK, due to the success of online sellers like Amazon, Ebay, physical retailers have taken a beating. Some companies like Comet, Jessops, HMV and Blockbuster saw their fortunes fall, as they chose not to enter online retailing arena. It is also observed that online retailers are losing out to supermarkets; primarily due to their large size and larger variety of products in store, as well as online. Eg- not only are supermarkets offering electronic products, many are also opening up spaces for gaming areas leading to a struggle for gaming retailers to continue profitably.
In USA, the scenario is slightly different, where Alibaba took over Walmart as the world’s biggest retailer; and 40% of the market share in US is held by Amazon. Today, right from ordering a cab, to ordering breakfast/ a meal can be done online. This has impacted the traditional purchasing pattern heavily. PwC’s Total Retail Survey 2018 found, after closing more than 140 stores in 2017, J.C. Penney is shutting down one of its distribution centers and eight more stores nationwide. Sears Holdings closed 103 stores in April, following the closure of 63 locations in January. The retailer closed more than 350 stores last year. 2018 has been yet another challenging year for traditional retailers. After shutting down more than 5,000 stores in 2017, there have been more than 2,500 store closures announced over the past few months.
In South Africa, competition has taken a new dimension. With new entrants into the retail markets, store sizes and their look-feel are changing along with a rise in bulk purchases. The growing middle class population in South Africa is attracting local and global retailers, giving rise to variations in store location, atmosphere, design, travel distance, and prices. “Young consumers, interestingly, tend to shop not from a utilitarian perspective but from a hedonistic perspective. Their key indulgence includes getting product ideas or meeting friends. They also view shopping as a means of diversion to alleviate depression or break the monotony of daily routine.
In Australia, retailer Sneakerboy provides a seamless experience via e-commerce and brick-and-mortar model (as demanded by customers). Here, customers are trying out the product at the store and placing an order online, which gets delivered at home. With the availability of technology, customers now have the opportunity of purchasing online, with the possibility of returning them at no cost if it doesn’t fit the bill. However, all purchases and exchanges must be done without any glitches to prevent any social media criticism (for retailers), and avoid losing customers.
Global retail sale made $2 trillion online and is projected to surpass $4 trillion soon according to a report by eMarketer. In US alone, average annual growth has increased to $40 billion. However, retail is impacted by increase in business rates and rising staff costs, fuel and other commodity prices etc. To survive and thrive in the current environment, a retailer should not only keep track of competition, environment and customer profile (behavior, demographics, habits), but also keep his ear to the ground as far as technology breakthroughs are concerned.