In today’s competitive retail landscape, department stores are quickly becoming outdated. In the US, 25% of US department stores have closed their doors since 2002, suggesting online shopping has killed their market. What’s more, with as many as 5,300 retail store closings in the first half of 2017 alone, analysts estimate one in every four malls in the US will go out of business by 2022.
What’s to blame? Changing consumer spending power and habits, as well as the rapid increase in online shopping. Marketing Focus Director, Barry Urquhart has said department stores were the retail platform of the past, not the future – making a point of online retailer Kogan, holding a market valuation of more than double that of Myer.
This trend is about to hit Australian shores and the suggestion of a merger, between Myer and David Jones, is the first move by Australia’s big retail players in attempt to protect themselves from the online onslaught.
We’re now seeing online shopping and changing consumer spending power and habits have an impact in Australia, with the recent news that Myer and David Jones may merge. With online shopping on the increase and a number of convenient delivery options available to retailers and consumers alike, is the department store as we know it dead? Are they relevant in today’s digital environment?
With consumer spending stymied by increasing bills and stagnant wage growth, Aussies are becoming increasingly price conscious. No longer do we walk the isles and make an ad-hoc purchase. We’re becoming a much savvier bunch of shoppers. Couple this with the fact we’re becoming increasingly time poor, going shopping at the mall is becoming an expensive and laborious task you could do without.
Aussie shoppers are turning online for greater value. And now, with 3-hour delivery being available in our cities, online shopping offers greater convenience too, giving consumers back their time they would otherwise have spent travelling.
However, as much as we’re ringing the bell on traditional retailers, there are opportunities to combine the digital and physical experience of shopping. This is being seen in places such as Burberry’s flagship store on London’s Regent Street, where online insights form offline interactions – ‘magic’ mirrors tell customers more information about the products they’re holding and large screens display the latest runway trends.
You can even bring the convenience of online delivery options to the in-store experience, enabling Aussies to purchase items in-store and get them delivered to their home at a convenient time for them. No more having to carry bags around, just simple, easy and convenient shopping.
Bringing the convenience of online with the experience of in-store can really help the big retailers carve out a new space for themselves, becoming an experience destination rather than just a shop.
The retail industry, particularly the big end of town, needs this change. It needs to find its new style and embrace it. What’s going to be on trend over the coming months will be this hybrid experience. Those large retailers that act now will be the ones that come out on top and remain relevant in today’s highly digital world.
Wayne Wang is the CEO of Go People