Are stores headed for complete downfall in retail?

There are tons of news in the past 5 years where the stores in the retail industry are heavily impacted. Most of the large brands (RadioShack, Sports Authority, Kmart, Aeropostle) and many more which have declared bankruptcy, and there is often news about Major stores which are doing well over all, closing a number of their store locations(Walmart 159 locations, JC penny- 140 locations, Macys around 15% of their locations).
They are unable to keep the stores and business afloat. Could they continue to sell their products, sure. but the costs of running those large stores, the declining margins leave businesses to not be profitable anymore.
But why is this happening, and are stores headed for a complete downfall in the retail space? I am in particularly talking about the North American market which I can see in front of my eyes. Let's explore & dig deeper.

Why are stores in so much pressure?

The holy grail of $$$ from stores is directly proportional to the footfall of customers in the stores. however it is becoming very clear that less and less people are walking through the front doors of the Store. May be that time is gone when people spent days walking through stores. This used to be a fantasy of young generation to go in malls, try new clothing and end of the day buy few things as well. people used to Window shop a lot.
these days, it has changed.

Why aren't they coming to stores?

There is a huge shift in the way people have started to shop. On the rudimentary level, there is still a large mass which goes to stores to shop [look at Costco/Walmart over the weekend], however a lot of people, didn't want to use the word 'millennials', have started to see these as commodities or repetitive chores which could be 'programmed'. that has led to all the 'subscription' models, or 'buy online, pick up at a store' are doing extremely well.
When people buy in stores, it always leads to much more than what's on the 'shopping list' and that converts to additional revenue for companies. But when people buy online, it's hard to upsell and have the buyers be induced into buying more.
to say it simply, Shopping in stores leads to discovery, shopping online leads to convenience.

I read this quote somewhere that 'people will go to stores for value or experience or person oriented services/ purchases, and less and less for everything else'. those changes are evident in the markets at multiple levels.

 Where is online shopping reshaping the buying pattern?

Let me talk in terms of two types of store formats, and how online has reshaped these propositions:

1. Stores selling common brand merchandise: Think about Stores like kohls, JC Penny, Macys from a clothing perspective, or think about Finishline, DSW, Adidas, puma, Nike, famous footwear and many other stores in footwear segment, or best buy, PC Richards, Target, Walmart in electronics, the list goes on. There are so many retailers who have been selling multiple commonly known brands in the markets. You could be looking at a particular product, say a Nike fs lite 2 shoe carried at all of these stores. hence, the differentiator left for the end customer is the price. Enter Amazon into the equation and things are no more the same. if the price is the baseline and differentiator, then do I need to visit the stores and waste time? dotcom sites become critical here, and to some extend the differentiators.
1. Dotcom sites become the first line of differentiators, as well as the window into the brand.
2. Customer experience is no more how sexy the store looks, but also how easy is the website to use (fast, easy, search friendly, mobile friendly). 
1. Look at how super fast amazon has made their checkout process. all others are following suit.
2. NordStorm leads the pack in the way search results are configured and experience is built.
3. Pricing is much more easy to be compared online, and hence being able to respond to this price war becomes a necessity for the businesses to stay competitive. 
4. In the online world, it's two or three tabs on their browser and the comparison is simple & over. It was so much different in the offline world, where I could be wowed by a sales agent or our shopping senses make us buy things promptly.
5. Mobile penetration is growing like crazies, with consumers taking to mobile shopping like fish to water. this is becoming a battleground and a key differentiator for all of the companies as well
1. Look at marshalls, which has zero online presence. while their business model is different however I can't believe that they are leaving such a big pie of business out in the open, unused.
   
2. Stores selling private-label products: When I talk about private label brands, Think of Sonoma  at Kohls or Merona at Target, Amazon basics, Mama bear by Amazon, Kirkland at Costco  and many such examples all around us. Walmart sells almost 40% of private label products in their stores. these are private labels, which means you will only find these products/brands at a certain store. As a customer, the most disappointing thing is to be able to walk into a particular store, looking for a particular product(size, color, availability) and only to find out its not there. This is a huge area of concern for the customers.
   
   While private label brands drive loyalty and selling more and more of them is a great thing, customers don't want to waste time. Some points on how online is reshaping the strategy for this segment:
1. Make products availability known upfront. don't waste customers time.
2. let website help customers decide which store will carry the product they are looking for.
3. having better sync between actual availability on the ground and shown on the website. I have seen tons of conflicts at Toys R us, Target, Walmart, kohls and also everyone. good thing, they are all working on it.
4. Finally, make it easier for customers to shop from inside the store across dotcom. If they find a product which is not available in size, make it easier for them to order from online
1. Prompts in store to shop online for more colors/sizes- most of the stores do it.
2. Bar codes which can be read by the phone apps/scanners- very few do it.
3. Have store reps help order online with clientele apps -very few do it today.
4. Easy kiosks to browse the website and shop directly from online- kohls is already piloting this.
5. Finally, taking help to look for products in a nearby store- most of the stores can do it, however, this is seldom used. I have used it multiple times at Target, best Buy.

What are other areas where stores are actually lacking?

1. Customer service-Sales. I will write separately about this.
2. Second sale
3. Continued engagement with Customers. 
4. Personalized outreach

Hence, unless the stores really tighten their game, the extremely high costs of running the real estate hungry stores will continue to put pressure. add on top of it, its going to continue getting more and more competitive on price and everything else. 

The key for retailers will be really to bring their A-game to customer experience, and leveraging stores as their biggest assets and using best mix of people and technologies to think like their customers and fulfill their expectations.


What do you think? do comment below and let me know. This is a wide topic which covers many other topics. I will write more about individual topics in further posts.