The 'Retail Apocalypse' Is A Cover For High Customer Standards

The idea of the “retail apocalypse” — that online shopping has forced mass store closures — is clickbait nonsense. While ecommerce is growing its percentage of overall retail revenue significantly faster than stores, virtually every consumer category still does a majority of sales in stores.

The disruptor brands theoretically responsible for the apocalypse by beating incumbents with digital efficiency and declared-data precision are now un-disrupting their disruption by opening hundreds of physical locations.

Reading between the lines of mass store closures

If stores remain a core revenue driver, why does buzz about their extinction get top billing?

One culprit is sensational headlines calling out the volume of store closures (Retail apocalypse’ now: Analysts say 75,000 more U.S. stores could be doomed). By aggregating statistics across subcategories like clothing, electronics and home furnishings, the view of the “problem” is so broad it’s not actionable.



Another reason is endless references to once-mighty chains like Sears, which went bankrupt after a stream of store closures. When digging into such case studies, many wounds appear self-inflicted. For example, Sears’ About Us description states it is “the leading home appliance retailer.” Sears’ identity is aligned with products like water heaters, dishwashers and washing machines that require expert installation and maintenance.

However, these adjacent services were not consistently prioritized, leading to notoriously poor customer service. When there are many options available, people will buy their water heater from a company known to support the complexities of owning a water heater.

Using companies like Sears to justify a retail apocalypse is all the more questionable, considering those who thrived in the same market conditions. Store sales account for 85% of Best Buy’s annual revenue, per Forbes. The brand has defended against lower priced competition with price matching and created happier customers by investing in staff trained to be more consultative than executional. The result is five consecutive years of sales growth and a stock price that’s quadrupled since 2012.

The more accurate story: high customer standards are ending mediocre retail

The retail apocalypse conversation largely ignores an important piece of common sense: with vastly expanded options to influence others at scale, customers are in control. This dynamic raises the standard for an “excellent experience” agnostic of medium. It increases the odds customers will churn to cheaper or better options if that standard is not delivered.

This, in part, contextualizes why Best Buy thrived while Sears failed … the former made commoditized products more appealing with competitive pricing and invested in reliable services. The latter never fulfilled a 360 partnership.

So yes, lots of people want to buy stuff online because it’s inexpensive and easy. Many of those same people also want stores for expert curation and product feel. As a result, research, comparison and transaction are often done fluidly across stores, ecommerce and apps. Brands that evolve to add value along this journey are positioned to grow everywhere products are sold.

Warby Parker CEO David Gilboa reinforced this point when describing why the digital-native brand decided to open dozens of retail locations. “More than anything, we want to give customers options. We don’t care if customers are engaging with us through a physical store, online, through their phones. We just try to make things as easy as possible.”

Leaning into a value-based strategy

The evidence indicates that to acquire new customers at scale and consistently grow their value over time, brand needs to stay competitive on price and raise the standard for delivering value online and in stores. The core road map is rather simple.

Break Down Siloed Operations: Ecommerce, retail, brand and marketing teams need to work collaboratively and not competitively to gain a complete view of customer activity and learn where value is best delivered.

Adopt Systems That Marry Cross-Channel Data: Technology that maps a longitudinal customer view across ecommerce, retail and experiences is the mechanism through which collaborative teams gain actionable insights that yield greater customer value.

Invest In Fast Onboarding Solutions: With the right systems, brands learn what purchase patterns are correlated with loyal, high-value customers. People who buy from a brand across channels have a deeper relationship, as indicated by purchasing more often. A common next step is encouraging lower value customers to fulfill the same pattern. This process requires onboarding tools that minimize the lag between insights and activation, increasing the speed at which brands can learn what combination of store and online works best for different segments.

Balance Creative For Efficiency and Value: Static ads and carousels are effective for delivering efficient conversions, but may not be the best for brand introductions or deepening customer relationships. This is why it is important to build both creative aligned with short-term performance efficiency and creative that supports clienteling, curation and storytelling.

Adopt Real-Time Performance Signals: Experiment with the best way to deliver customer value. It is key to adopt website pixels and offline conversion APIs to determine impact in real time.

The retail apocalypse is a cover for customers no longer accepting messy, chaotic or unhelpful stores. That’s a good thing —it has forced the industry to step up its game. Brands that remain inert are destined to lose favorability and market footing. Those who move towards harmonious online and retail operations are empowered to grow their share.


1 comment about "The 'Retail Apocalypse' Is A Cover For High Customer Standards".
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  1. Ronald Kurtz from American Affluence Research Center, July 3, 2019 at 12:30 p.m.

    Thanks Ben for telling it like it is. Very refreshing to see someone challenge the concept of a "retail apocalypse"  and provide an honest and accurate review of the challenges facing the retail industry and what retailers  might do to address the challenges.

    It seems the best solutions are pretty obvious, but perhaps difficult to achieve: more and better trained staff, desirable products priced at a good value, inventory well organized and presented, etc. Efforts to become an "entertaining experience", which seems to be the current conventional wisdom,may prove to be a costly mistake. 

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