• by Jack Loechner , Staff Writer @mp_research, June 19, 2018

According to RSR Research surveys, 2017 was the year of the so-called “Retail Apocalypse.” If the common wisdom were believed, says the report, stores were closing at a record pace, brands were dying or being subsumed by other stronger players, and every retailer was terrified that consumers’ digital shopping habits would leave them in the dust.

But, says the report, in 2018, retailers are getting over their panic that giant eComm players like Amazon will disintermediate their brands into oblivion. While one-half of retailers in the surveys have consistently said that they believe “stores PLUS digital” is the key to the future, in 2017 the other half favored digital over stores (34% vs. 11%) as “more important”. This year has flipped to stores over digital (29% vs. 20%). 

However, says the report, most in the industry think that even conservative retailers must inevitably move to a “stores plus digital” strategy if they want to continue to connect to consumers and how they shop. The inevitability of that is why RSR doesn’t believe in the so-called “retail apocalypse”. In fact, what’s happening now should be called “Retail’s Renaissance,” opines the report. That is what Deloitte Consulting’s Preeti Pincha called the current state of Retail, in a presentation made at the Pitney Bowes’ (R)evolution conference in May.

In her talk, she made these points, says the report:

• In the USA, unemployment is near an all-time low
• Customer confidence is high
• The stock market is higher
• And consumer debt is low
• All of these point to a healthy consumer economy, and last year the Retail industry grew faster than the GDP, 3.5% vs. 2.3%. 

According to Deloitte’s Pincha, says the report, the retail market is bifurcating, with most new discretionary income going to the upper 20% of wage earners. And for the lower 40% items that used to be discretionary (smart mobile phones and expensive mobile network access contracts) are now perceived as non-discretionary,  adding to their already burdened budgets. 

Retailers that have a “balanced” value offering (a little something for everyone) are the most constrained in this environment, says the report, (yes, those retailers are closing stores). But “price based” retailers are seeing good growth and are opening stores, and “premier” retailers are seeing better growth and are also opening stores.

• But the Deloitte Insights report also points out that higher-end consumers shop more in the digital domain, while lower-end consumers tend to favor the stores. In the Retail Renaissance, “digital” is to society what the printing press was to the European 14^th Century Cultural Renaissance, notes the report. Consumers who don’t use digital to enrich their lives will be like people who couldn’t read in the 1500’s.
• Retailers can’t take any solace in the fact that today a preference towards digital shopping happens mostly in the upper echelons of our consumer culture. No retailer can afford to take its time any more when it comes to interlacing the digital and the physical together in the store. 
• In this week’s Retail Paradox Weekly, RSR partner Paula discusses how the giant Chinese eCommerce retailer Alibaba is making its move into physical stores, an action more aggressive than Amazon’s foray into grocery stores. The point in both cases is this: both Amazon and Alibaba come into the market with a digital-first strategy, not a store-first one, and they already have a full suite of capabilities to weave into the store experience. 

For traditional retailers, investments in digital are made very cautiously and in serial fashion. Experimentation is rare, and retailers hate to “waste” money, so if they start something, they have an expectation that it will work, and that means that they are probably not breaking any new ground, concludes the report. 

And then there’s “the past”, which now feels more like a boat anchor than a legacy. In our forthcoming study on the State of eCommerce in Retail, says the report, we learn that the top inhibitors that retailers identify standing in the way of taking advantage of the digital domain are: the existing technology infrastructure, lack of capital, and organizational resistance (in that order). Amazon and Alibaba don’t have those problems to contend with. 

So, the future is already here, says the report, but it is not evenly distributed. Consumers are already living in the digital/physical world, irrespective of national borders, supply chains, or physical store walls. It even affects us at RSR, as our eCommerce studies are starting to have an element of “the store” in them, and our “store” studies are starting to bleed into eCommerce, concludes the report. It’s a “reflection of reality” says the report.

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