The growth of online business has lead to significant changes in retail industry. Now, many retailers realize that they have too many brick-n-mortar stores. This is evident from the fact that some retailers announced their plan to close their stores. For instance, Chico’s announced its plan to close 250 stores last month. Likewise, H&M had also set a plan to close its stores in 160 locations, while Charlotte Russe announced its plan to close almost 100 stores just yesterday.
Actually, closure of brick-n-mortar stores owned by multi-national retailers is hardly a new phenomenon. Many retailers have done so before. They include Williams-Sonoma, Nordstrom, Sears, and others. The retail industry has been in significant changes due to the growth of online stores. More and more customers are now heading to online stores to buy any stuff they need. Almost everything is now available online.
What Happens with Retail Industry?
In his post on Forbes, Steve Dennis noted that some retailers realized the surplus number of stores just recently. For him, this happens due to few problems, including:
Lateness in realizing the fact reflects the management’s lack of awareness. The phenomenon of store closure has been here for few years, but some of them are late enough to realize the fact. The growth of e-commerce, the role of digital in driving online traffic, the coming of many shopping channels have been evident in the last several years.
Therefore, if management of these retailers take aggressive actions just now, they might not pay enough attention to the market phenomena. This is particularly true for certain sectors like apparels, beauty and health, electronic, and even home and living. Many e-commerce channels grow significant in these sectors. In other words, if a business insists in maintaining brick-n-mortar stores in these sectors, they may not bee responsive enough to the market facts.
Attempts to Survive
Meanwhile, some others tried to survive with brick-mortar stores. The reasons may vary. They might include attempts to avoid their massive workers from losing their jobs. However, they finally realized that the brick-n-mortar stores not able anymore to boost sales. These stores need significant spending for salary and daily operational costs. The sales are not enough to pay off the costs.
In fact, few retailers are successful in renewing the business models. They may combine the e-commerce and brick-n-mortar stores. They use the digital media channels to promote the offline stores while serving the purchases via e-commerce. One thing is certain: retailers need a significant change in their business models. Otherwise, they will lose more.
What The Management Needs to Do
The management can ask a number of questions before making a decision to close the stores.
“Is there any legislation passed that can affect the business models significantly?”
“Is there a competitor that suddenly attacks the business fundamentals?”
“Is there a shift in customer behavior that can significantly affect the presence of offline stores?”
If the answer is YES for these questions, there is no excuse for the management but to modify the business model. It is the time to do comprehensive check.