Is Brick and Mortar Dying?
Ernie Neve, CPA
August 18, 2020
One thing is for sure about 2020 – it’s going to change a lot of things permanently. For many years, society has set strange precedents based on inclusion and exception, and now, those chickens are coming home to roost. You’ve seen these sort of posts on Social Media, perhaps even commented on them before…
The Colorado bakery owners who refused to bake a wedding cake based on religious beliefs (which later went to the Supreme Court) versus “today’s” world, where owners are either forcing or being forced to ensure shoppers wear masks.
Our guaranteed right to peaceably assemble versus the enforcement of social distancing policies due to the pandemic.
And the lists goes on, and on, and on…
But the bigger challenge -and the one that is flying FAR under most people’s radar is a tiny piece of news that most folks likely missed.
UBS, a global firm that provides financial services and advice in over 50 countries, recently downgraded Macy’s and Kohl’s stocks. "To deliver steady long-term growth, we believe brands can no longer rely on Malls or Dept. Stores to drive traffic," a UBS analyst team led by Jay Sole writes. "Brands have to generate their own audiences and become destinations."
Now, there’s not anything really “new” here – Sears, long an anchor in malls and retail centers has been quietly drowning, and J. C. Penny is well into bankruptcy. Kmart has withdrawn in many markets and Radio Shack has been gone for several years, too.
I guess the biggest question is this: with so many well-known retailers struggling before the pandemic, why do so many new businesses see brick-and-mortar as the only option?
Near the office, there is an older strip mall that I’ve watched over the years. Every few quarters, a new business opens up, languishes for a few months, and inevitably closes. Over and over again, some entrepreneur opens their dream, only to run out of money …
Maybe they go back to work in the corporate world they came from, maybe they begin a completely new career, but the dream they had, to open a business, is gone. That’s a shame, because small business is the backbone of this economy.
The reality is clear: traditional retail is dying in many industries. How people are shopping, and how they expect to be served, is changing – sometimes rapidly. Today, people want to consume data quickly, minimize the time they spend “running errands” or “shopping” in the traditional ways those were done just a few years ago.
Even their desire to wait in line to be checked out is getting shorter – witness the rise in “self-checkout” lines at many retailers.
As an entrepreneur, you must be tuned into these desires, wants, and needs, especially as a retailer. Even simple things like how you or your staff greet shoppers can make a huge difference in their desire to purchase.
It literally is the difference between success and failure!