Welcome to Parcelconsulting
Welcome to Parcelconsulting
The pandemic has accelerated the ‘death’ of traditional retail shopping as widespread stay-at-home orders have diminished foot traffic and, in some places, forced stores to close if they are deemed non-essential. Some retailers may survive this trying time, but it is likely that the industry will never look the same. Although this is not welcome news to any of us, especially those in the retail industry, it should also not surprise anyone.
The term ‘Retail Apocalypse’ has been around for 10 years, and with more than 9300 closures, 2019 was a record-breaking year. The foot traffic in shopping malls has been on the decline for a decade. Meanwhile, major retailers have been slow to adapt to changing customer expectations.
Between the impacts of the coronavirus and the already-changing retail landscape, we can expect another record-breaking year of closures. However, it’s not all bad news. Some retailers might survive if they adapt to the new normal.
The “Retail Apocalypse” refers to the mass closures of brick-and-mortar retail stores, including major chains and other shopping mall staples, across North America. The trend started around 2010 and has been gaining traction with a 59% jump in store closings year-over-year between 2018 and 2019—the highest number since this data has been tracked.
Since 2012, more than 12,000 physical stores have shuttered largely due to the overexpansion, rising rents and slow abandonment of shopping malls by consumers. This led to low profits outside of the busy holiday season and then eventual bankruptcies, few of which were saved by buyouts.
Additionally, consumer spending habits have changed drastically. There has been a major shift toward spending on experiences rather than material goods as minimalism has gained popularity. There has also been a shift in appearance expectations with many offices and social settings accepting more casual fashion. Finally, the rise of ecommerce, especially Amazon, has made consumers comfortable with buying items from apparel to appliances online.
Let’s explore each of these in depth.
Past generations knew the traditional shopping mall to be so much more than a collection of brick-and-mortar retail stores. There were restaurants and food halls. There were activities. There were events for various age groups and for the whole family. The mall was an institution, a place where people would gather and spend their time. Now, malls are a shell of what they once were.
As of 2018, department stores had lost 448,000 jobs, a 25% decline. Further data shows 2019 left an even greater impact than the years before. As stores closed, sometimes other tenants took their place: dialysis centers, churches or even Costcos. Other times, the malls are closed altogether and demolished in favor of other real estate. Analysts predict one in four malls will shutter by 2022, and we are already on track.
The question that is explored by experts across the retail industry is, What happened? The death of the shopping mall is due to several factors, but insiders point to an increasingly busy and digital lifestyle that prioritizes convenience. Simply put, malls are seen as outdated, except for the ones that have transformed to meet the demand for experiences.
Some malls are actually thriving despite the grim fates of their peers and it’s because they’ve adapted to the experience-focused consumer of today. The Grove in Los Angeles features a miniature main street with a trolley running down the center, and it hosted a yearly summer concert series before the COVID-19 outbreak featuring artists like Smash Mouth, Plain White T’s and X Ambassadors. West Nyack, New York’s Palisades Center opened a bowling alley, a comedy club and an indoor rope-climbing course. Malls across the United States are also upgrading their dining options and attracting younger generations with Instagrammable foods and “see and be seen” hot spots.
Even direct-to-consumer brands understand the way to connect with shoppers is by giving them a way to interact with the brand and its story. That’s why they host pop-up shops or operate a limited number of brick-and-mortar stores. The stores serve as marketing tools, but, more importantly, they give shoppers a closer look at these buzzy brands and what they’re actually about as businesses.
As consumer behavior shifts and retailers scramble to respond, ecommerce grows ever larger. A recent Shopify report has revealed worldwide ecommerce sales topped $3.5 trillion USD last year, an increase of roughly 18% from the year before. Looking forward, ecommerce is expected to nearly double by 2023, putting the sales figure at greater than $6.5 billion. These are just the latest figures in a decades-long period of growth in the ecommerce sector.
Online shopping has become normalized and even preferred among some groups because it fits in seamlessly with how we live our lives now. It is fast, convenient and on the shopper’s terms. There are seemingly endless options to ensure you can get exactly what you want at the best possible price delivered directly to your door by the end of the day. As the world changes, people get busier with additional jobs and packed family and social schedules and don’t often have the time to go to a store and browse. Now, with the pandemic, the option to browse in-store is not even available.
Retail was one of the first sectors to feel the economic impact of COVID-19 with government-mandated store closures and a decline in sales as consumers held tight to their cash in case or because of job loss. In response, the CARES Act was signed, distributing $350 billion to the Small Business Administration. Small business owners in and out of the retail industry could apply for the Paycheck Protection Program, which would give them a financial cushion as long as they continued to pay their employees.
Some sanctions are starting to lift state by state, and stores will begin to open with extra precautions in place to protect shoppers. The NRF has launched Operation Open Doors to provide guidelines to retailers who are weathering the storm and reopening in the coming weeks and months.
As restrictions are eased and life transitions to a new normal, retail experts predict a number of changes that will define the post-pandemic retail landscape.
Price sensitivity. This follows any recession, but people will care more about prices of goods and services following the pandemic because of the speed at which the economy was impacted. Millions of people lost their jobs in a matter of weeks, and the recovery will be slow.
Increase in BOPUS. While 3% of all grocery sales were made by shoppers who had their orders delivered, that number spiked to 21% when stay-at-home mandates were passed in March, per Forrester research. Delivery demand will likely fluctuate when the sanctions are lifted, but the buy-online-pick-up-in-store (BOPUS) model has staying power. It has a similar fast and convenient feel as online shopping, and it saves the stores labor costs.
Mobile payments. As customers return to stores, there will be a wariness to touch credit card machines and other germ-filled surfaces. Apple Pay and other mobile payments—including ecommerce—are poised to replace existing payment methods.
Massive clearance sales. Non-essential stores that have been closed for the majority of spring and part of summer will have an overload of out-of-season products and huge incentives to get cash quickly. As a result, there will be massive clearance sales to get rid of excess inventory and catch up with the changing of the seasons.
Department stores go bankrupt. Neiman Marcus and JCPenny are on the brink of bankruptcy right now, which begs the question if they will recover from the impact of coronavirus. They may decide to cut their losses.
With very few stores to visit and a continued need for household, grocery and other products, there has been a recent surge in online shopping. Transaction volumes in most retail sectors saw a 74% increase in March, compared to the same period last year, according to electronic payments process company ACI Worldwide. This shows the necessity of selling online, both now and in the future. There is no better way to reach such a wide array of customers, whether or not they are sheltering in place due to pandemic-related concerns.
Plenty of services can get your ecommerce operation up and running by helping you launch a website, import your product catalog, set item description and pricing, create and execute a marketing strategy and all the other activities required before you can make your first sale. However, the setup you may find to be the most complex is your fulfillment. If the farthest you’ve taken your products is from the stockroom to the showroom, you’ve got work to do.
Parcel Consulting was started with a simple mission in mind: Connect end shippers with the best carrier and rate strategy for their needs and the best software options to streamline, automate and improve the accuracy and efficiency of the daily pick, pack, and label-printing process for their business.
We work with many different carriers and software partners, so that we can recommend the best solution based on more than a decade of actual experience with all of these providers.
Most people, even those experienced in shipping and logistics, are surprised to find out how many new and innovative carriers and software options exist now.
We have been tracking, comparing and evaluating them objectively for more than 10 years and we freely share our personal review of your shipping needs by simply scheduling a phone call or video conference with one of our experienced shipping consultants.
We’ve been preparing for this for more than a decade and we’re here to help! Give us a ring to discuss your options at: 833-PARCEL-1 (833-727-2351).
