By Dean Stallone
CEO, PMD Media
As a leading indicator, the numbers are quite stringent; The total amount of retailers vs. all other types of stores PMD MediaIts independent storefront network is rapidly declining.
As of April 2018, retail stores accounted for 22.4% of PMD’s 45,000 independent U.S. storefront network. By April of this year, just 4 years later, this percentage had dropped to 17.5% of the total network, a drop of about 5-points.
PMD is an excellent source of information on this front. Our field staff has personally visited dozens of cities, hundreds of neighborhoods and thousands of retailers in the last four years. We can compile a narrative about the current state of the real-world retailer like a few others.
What is the cause of this fall? Is there a general trend for online brick-and-mortar shopping? Is the effect of Kovid-19 still being felt in the growth of e-commerce? And is this a trend that is increasing or decreasing as we move from an epidemic economy to normalcy?
To put it bluntly, the retailer movement has been going on since long before March 2020.
From online to offline and back again
No company is more responsible for the transition to the online world of e-commerce than Amazon. The company has made shopping so easy, and shipping so fast, that more than 148 million Americans are members of Amazon Prime – about 50% of the entire US population.
Amazon is arguably the world’s most advanced online retailer, with its retail media network earning billions of dollars a year, including gold-value and highly sophisticated customer targeting for RMN.
Excluding the current retail trend, Amazon is opening brand new brick and mortar grocery stores. Amazon Fresh, as they are called, is a physical grocer, with advanced “Just Walk Out” technology, where you don’t have to check out. Amazon only knows what’s in your shopping cart and charges your credit card on file. (Note for thieves: no shopping is possible)
Marketing is equally attractive for these brand-new, technology-advanced stores. Amazon is taking a low-tech approach with a large portion of their marketing budget, pointing to storefront billboards and custom creative ones. Old-school sales offers and buyer specials are displayed to bring people to the store, just as grocery retailers have been advertising for generations.
Warby Parker Another online retailer that has moved to the real world. Launched as a full-fledged online eyewear store, it says most of its business is now done in more than 150 brick and mortar locations across the country. Founded in 2010, Home Tri-On was a thing of the past, even before D2C became a word. You can order 5 pairs of frames at your home or office, give them a try and then decide which one you like best.
Now, Warby customers can go to a store and try out 50 pairs and see which one they like the most. Talk to a living person and ask for face-to-face professional advice.
View from the ground
From what PMD Media brand ambassadors have seen in more than 60 cities in the last 12-48 months alone, the United States has far more retail locations than last year. While some cities have performed better than others, the major coastal metro areas of New York and San Francisco are much worse off than small markets, with Midtown vacancy rates up to 30% higher. Markets like Nashville and Austin are doing much better, with only 3-5% void rates
Since the epidemic, there has been an acceleration towards online retail, but the numbers seem to suggest a stabilization lately, especially since people are returning to the physical world after being locked in their homes for two years. Being able to touch a product for sale, see it in person and talk face to face with a salesperson is now seen as a luxury. I often found myself picking up my phone to buy something, and instead of opening my butt, I jumped into my car and went to the local store.
Retail defeat on us? Maybe. Or perhaps, now there are more choices. The miracle of personal shopping is still here and I would argue, to stay here.
After buying 100 times before, do you know exactly which toothpaste you want? An online store may be the best choice for you. Want to sit on that sofa to see if it’s comfortable before you send it home? A brick-and-mortar location is still the best choice.