« Back to Blog

Death of Retail: Fact or Fiction

Posted June 16, 2017

Many of the headlines in the news about brick and mortar retail suggest this method of spending is becoming extinct and that many consumers are using solely electronic means to purchase goods. Even a word as dramatic as “apocalypse” has been used to describe the situation, as you will see later in this post. In reality, however, only 8.4% of total sales in the first quarter of 2017 were attributed to e-commerce, according to the U.S. Census Bureau’s quarterly retail report.

E-commerce sales are defined by the U.S. Census Bureau as the “sales of goods and services where the buyer places an order, or the price and terms of the sale are negotiated, over an Internet, mobile device (M-commerce), extranet, Electronic Data Interchange (EDI) network, electronic mail, or other comparable online system. Payment may or may not be made online.”

Again, just 8.4% of total sales came from e-commerce in Q1 of 2017. Many of us are no doubt surprised to see such a low percentage, given all the hype surrounding e-commerce. The reason e-commerce has received so much attention may be evident from the chart below: there has been steady growth since 2007 of e-commerce as a percent of total quarterly retail sales — evident whether viewing adjusted or not-adjusted sales.

The growth of e-commerce is undeniable, but that does not necessarily mean other ways of consuming have become irrelevant. Successful retailers are simply changing with the times as detailed in the May 19, 2017 CNBC article, Why predictions of a ‘retail apocalypse’ are overblown.2 The author Richard Levine makes the case that consumers now demand to be entertained more than ever, and this is changing how stores should be approaching their customers. Accordingly, “Brick-and-mortar is not in fact defunct. Instead, it is evolving, and successful retailers are embracing a shopping experience that blends a variety of platforms and ultimately creates the engagement necessary for a brand’s success.” He goes on to detail how certain retailers appeal to shoppers by incorporating showrooming, adding restaurants and offering interactive ways to experience the product including group classes. He concludes that “these brands recognize the new world of engagement, entertainment, excitement, and experience that the new shopper seeks.”

It is possible that these additions will still not result in an in-store purchase, but does that matter? If a sale is completed online after the in-store experience, the brick-and-mortar element still played a crucial role in completing the sale. As explained by Levine, “consumers enjoy the shopping experience without actually shopping: in many cases, they won’t bring home a purchase but instead buy online after enjoying the shopping experience. In the end, the brick and mortar assists the transaction that would not otherwise have occurred.”

Yes, brick and mortar stores may change, and certainly more will close if they cannot successfully appeal to consumers, but an apocalypse is far from likely.

Leave a Reply

Your email address will not be published. Required fields are marked *

Sign up for our monthly Bell e-News.

To get the latest news and updates from us, please fill out the form and click "Subscribe" to receive our e-newsletter.

Market Analysis

White paper feature image
Technology and Small Caps Score Best Sectors for Q2 and 2018 (7/5/2018)
July 3, 2018

The Dow Jones Industrial Average and the S&P 500 reached the end of the second quarter well below th...


Video

video feature image
Is This as Good as It’s Going to Get?
June 27, 2018

Join us for our quarterly Investment Committee Update online webinar.


Publication

bellinvest publicaion
Trump Punishes Craft Beer
April 19, 2018

Thanks to the St. Patrick’s Day editorial page of the Wall Street Journal, I learned about America...

Latest News

NorCal Conference Inspires

Every year, representatives of the Bell Investment Advisors financial planning staff attend the Financial Planning Association NorCal Conference in San Francisco as part of a continuing desire to maintain the highest standards of excellence in Bell’s financial planning practices, as well as to pursue ongoing professional education. On May 29 and 30 of this year, […]

Latest Tweet

Connect With Us

bellinvest 20 year