Retail apocalypse: Brick and Mortar stores’ death sentence?

The arrival of the Internet and its later implementation in every aspect of our daily lives has led to significant changes in the way humans behave. Shopping is no different, and customers have not only switched their attitudes towards a more online environment, but also made companies have to adapt to the digitization of business. Retail is one of the most affected sectors by the shift in consumer buying behaviour, leading retailers whose modus operandi was focused on the in-store experience, to either bankruptcy or having to change the way they operate. This has been nicknamed by many as the retail apocalypse, but how accurate is it? Have we just signed the physical store’s death sentence?


Amazon vs Toys R Us


Toys R Us is probably the most symbolic company that has filed for Chapter 11 bankruptcy due to this shift in customer attitudes. The brand, which many remember fondly as the reason behind some of their happiest childhood memories, had lost market share favoring online retailers like Amazon, increasing the debt to $5 billion and having to liquidate most of their assets to gain solvency. The process resulted in the definite closing of all Toys R Us stores in the US, making the corporation a symbol of the 21st century’s approach to retail… Or is it?

While it is true that online shopping has obliged many retailers to adapt to the new market, the implementation of online shopping and the ability to maintain brick and mortar stores are not mutually exclusive. Many companies have opted for a hybrid system in which online and in-store experiences are available to the customer, where the client can research and reserve the product online and go to the physical store to purchase it. Not only have physical stores gone online, but also many digitally native retailers that used to sell purely online like Amazon are starting to set up physical stores like supermarkets, where new technologies meet traditional shopping standards.


On-line v/s On-ground Retail: A tough call to make


Nevertheless, not all businesses have had to adapt to the new shopping standards. Some stores like TJMaxx, an American department store chain, or classical thrift shops are thriving during this retail apocalypse. The reason behind this avoidance is the shopping experience that usually resembles hunting for bargains: stores that cannot be replaced by a website due to their shopping experience driven essence have sustained themselves while remaining purely physical. The strategies behind this are often as simple as not knowing what they are selling, and basing their dynamics on a constant product rotation which often cannot be offered by an online retailer.

As if the process was not prevalent enough, the onslaught of the pandemic has worsened this already sinking business further. While forced digitization of stores was already prevalent before, and sinking sales funds were more or less restricted to the final seasonal quarter, the pandemic has sunk this value way lower where the figures now look bad throughout in comparison. But this is not a new phenomenon: we’ve seen this happen time and again with the likes of Blockbuster & Gamestop,who were forced to shut most of their physical retail outlets after seeing a dwindling number of customers return to stores.. There have been a variety of factors that have accelerated the preference of the explained above hybrid or online stores over physical retail. One of the most prominent reasons for this is the availability of subscription models.


Evidence suggests that subscription models simply do not work in physical retail as well as online retail. And the examples of it are stated above too. Blockbuster was a business that relied on late fees from its consumers to stay afloat. The physical subscription model is flawed. It runs on wasted subscriptions and later fails to recuperate the losses it generates by default. However, this model works surprisingly well in online stores as a lot of customers end up buying less than they would in a physical store due to shipping times and lack of visual stimuli, or due to the availability of a near-universal marketplace creating a paradox of choice, leading to cancelled purchases.


Hybrid DigiCorps: The Onset of the Retail Meltdown

This plight of retail giants by digital businesses has been worsened by online delivery services like Amazon, Flipkart and the like who serve as a one-stop shop, and provide all facilities mentioned above, massively converting swathes of different consumer bases into an integrated one of their own. Their investment in smaller business in regions like India, and integrating smaller scale delivery chains to build a robust network have made it possible for them to cover large areas which can end smaller scale retail businesses if they are localized and do not try to go for a hybrid approach. For the near future at least, it seems like such a hybrid approach is the way to go, or end up wiped out by a bigger corporate that is willing to, like Snapdeal was in the Indian Market.

On the contrary, smaller scale retailers might choose to adopt an entirely online approach, which has been made all the more feasible by the widely user friendly, public availability of social media marketing tools. 2020, in the Indian marketplace, saw a large-scale boost in digital businesses with a bunch of smaller scale apparel stores choosing an always-online approach. This digitization of businesses is also leading to diminishing brand loyalty, which is a feature that brick and mortar stores kind of need in order to run their franchises in a stable manner. Brand loyalty might not get completely wiped out, but with the emergence of such small scale businesses creating a dynamic, multi-modal brand identity, paradox of choice is going to run rampant. The death of malls, retailers and jobs is going to be accelerated by the ease of accessibility and setting up digital businesses, which is going to make incentivizing consumers to return to physical retail stores harder.


In the end, adapting to the latest technology is something humans have had to do throughout history, and business is just another aspect of life that must constantly evolve with changing times. As hard as it may seem, the death of retail doesn’t seem to be looming over the horizon, but a change is inevitable. Most of the brands are approaching the economy in a hybrid way, and that model seems to be the one that’s going to be in-thing for the near future. It is hard to tell to what extent it will happen but for the moment being, with correct management, it does not seem like the end of brick and mortar stores is anywhere in the near future.


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