Ever since the Great Recession, Americans have started to spend more money each year enjoying the prosperity of a time of economic abundance, but those habits have certainly changed. Even though people are spending more, they are doing so while avoiding retail stores. Americans today are opting for paying for experiences instead of objects, thus letting go of the time-honored tradition of crowding the malls and shopping centers and instead deciding to spend their hard-earned dollars on trips, dining experiences and big-ticket purchases like automobiles and such.
This type of economic activity is bad news for retail chains like Macy’s, Sears, Toys “R” Us and Kmart who have had to close literally hundreds of stores this year and who are uncertain as to how much more real estate they are going to have to give up to prevent bankruptcy.
Part of the problem lies on the fact that customers today have a very different relationship with the products they acquire. People no longer care so much about the shopping experience and are willing to sacrifice the ambiance provided by a store and the personal customer service that characterizes face-to-face purchases, in order to get a better deal and pay less for products and services. Today’s customer has taken charge of the shopping experience and molded it to fit their needs instead of allowing retailers to define how shopping is done.
Here in Suzzanne Uhland’s Blog we have talked about this phenomena for the particular case of Toys “R” Us, but on this occasion we want to focus on something that is happening in a massive scale with different retailers and how hoping for customers to simply change their shopping habits is just not going to cut it anymore to stop the distress that many of these companies are going through.
Sears is one of the most particular cases because even though clothing and home appliances are categories that are on the rise in sales, these sales are simply not happening at the brick-and-mortar stores anymore. Last year alone, clothing sales in the US alone increased a little bit over 3 percent to a total of $218 billion, yet department stores and mall-clothing retailers reported a drop in sales of over 4 percent.
Other clothing stores that can be counted on the list of those filing for bankruptcy, or pretty much about to do it according to the experts are: Nordstrom, Neiman Marcus, Gymboree, David’s Bridal, J.Crew and Nine West Holdings amongst others.
Something that is a bit strange and stems from the reduced foot traffic that malls are presenting due to changes in people’s shopping habits, is the fact that retailers like Perfumania are suffering. The fragrance store has reported a decline of 64 percent in sales last year and at this point, they are very close to default within the next 12 months.
Tiffany & Co is another giant company that to the surprise of many, struggles today. The iconic jewelry retailer is simply unable to reach younger shoppers and has been having a lot of trouble with sales. Some people say that their marketing strategies are to blame, especially their disregard for trendsetters and other modern means of advertising. Focusing so much in gift purchases for occasions like engagements, have made them neglect a large target audience like women who shop for themselves.
On the other side of the spectrum, we have Payless Shoes, the famous budget-friendly store that is just not immune to the same changes that are making so many others suffer. The retailer is already planning to close hundreds of stores and let go of a large portion of their staff. Being months behind on their bills is not helping the situation, so they are doing what they must at this point.
Interestingly enough, people have speculated in a pessimistic manner what is going to happen with grocery stores and supermarkets after Whole Foods was purchased by Amazon and Walmart has made a big leap to the e-commerce of foods. However, the reality seems to be quite different so far. It appears that people are still not ready to let go of their regular habit of physically buying their food and having a close relationship with the products they want to consume. Even after the competition is becoming fierce and grocery shopping is about to transform into a new type of experience, people are holding on to their habits, at least for the moment. Perhaps in the very near future, these virtual giants will be able to revolutionize the industry just like they did with books and show people how shopping for food can also be done from the comfort of their own homes while trusting the companies that are now reaching into every corner of the market, to bring them their daily consumables at the smallest amount of effort.
* Featured Image courtesy of Pixabay at Pexels.com