It’s no surprise that consumers are spending more dollars online. E-commerce now makes up nearly 10 percent of total retail sales in the U.S., a number that has grown roughly 15 percent year-over-year since the end of the recession. As consumer shopping habits continue to shift, e-commerce is only expected to continue grabbing a larger piece of the pie.
What does this mean for brick and mortar retailers?
Don’t change your business model just yet. While consumers are spending more online, there is still demand for physical retail locations. This is apparent by the rise of online-only retailers beginning to establish physical locations to grab greater market share of overall retail sales. E-tail stalwart Amazon is a prime example of diversification in their customer shopping behavior strategy, as they now have brick-and-mortar stores and further expansion plans underway. Other online-only retailers now making the transition include the likes of Warby Parker, ModCloth and Bonobos.
Then why are so many existing retailers closing their doors?
While online retailers have started to gain ground on their physical counterparts, many established brick-and-mortar brands are beginning to shutter their locations. While the specific reasons are unique to each retailer, culprits of closing include underperforming locations and shifts in their primary customers.
How can my retail establishment stay competitive?
Do you really know who your primary customers are? As buying behavior continues to change so too will your customer base. To make sure your business stays competitive it is important to know who your best customers are, where those customers are located, and what their value is to your business. Staying on top of changing lifestyle characteristics will allow you to keep a pulse on your customers and remain relevant.
To succeed, it will also be important for retailers to understand which business locations are forecasted to grow and which ones may be underperforming sites that need to close. Retailers should conduct an existing store location analysis to identify which stores will continue to meet or exceed expectations, and which sites may be ripe for enhancements or closure based on actual and forecasted performance.
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