Brick and Mortar Retail is Not Even Close to Dead

Feb 6, 2013 in Retail

Out on the interwebs, articles predicting a grim future for brick and mortar retailers are in abundant supply. Most of them note the growth in online retail spend and stagnant growth in offline retail.

Recently, one of these articles really caught my eye.  Marc Andreessen talked about how software is swallowing traditional retail with PandoDaily. Everything Marc says in this interview is either true today or has potential to become true in the near future.  I especially like this bit:

“Retail chains are a fundamentally implausible economic structure… You combine the fixed cost of real estate with inventory, and it puts every retailer in a highly leveraged position.  Few can survive a decline of 20 to 30 percent in revenues.”

Again, all true… Except for the link bait in the title (see: absolute death).  The title of the article makes it sound like your local grocery store is shutting down next month. It might as well say, ‘This 2013, you’ll be forced to buy your milk online… sorry folks.’

Ultimately, it is misleading to say the absolute death of brick and mortar retail is upon us. Lets look at a couple of telling facts:

  1. Somewhere around 95% of retail purchases are still made offline
  2. Most predictions still have online retail sales at less than 10% of all retail sales through 2016 (Forrester chart below)

I’d have to agree that retail will never be the same. Topics like showrooming and omnichannel marketing are hot for a reason: they are new and they are scary to traditional retailers. As online retail evolves, so will offline retail; Heck, online retailers may even find reasons to set up stores.  It won’t look anything like you remember it as a child, but that isn’t a bad thing.

Don’t fret, retail operations and retail execution will continue to improve and you’ll still be able to pick up your milk down the street…  It just may not look like the grocery store you’ve always known.