By Charley Babb
In the past seven months, there have been several references to “fake news”. Originally referring to politics, this phenomenon may have crept into the reporting on the state of the retail industry in the United States. While the mainstream media has been proclaiming the demise of retail as we know it, you wouldn’t know it from the number of participants at this year’s International Council of Shopping Centers RECon convention, where a staggering 37,000 attendees came together to secure business deals and advance the industry.
The Wall Street Journal, USA Today and others have filled their pages with stories of retail bankruptcies and store closings suggesting that the only “retailer” soon to be left standing will be Amazon.com. Though Amazon’s evolution is an amazing success story, it serves to set a false narrative for what is really going on in the retail world. The reality is that thousands of retail stores are opening this year. Sure, you have heard about some major names that are closing stores, but what about the ones that are expanding? Dollar Tree, Dollar General, TJ Maxx, Old Navy, Kroger, Autozone, Ulta and others are all growing significantly. According to Paula Rosenblum at Forbes, 19 different chains have announced the opening of 2,861 stores in the same period as the announced closing of Sears, Kmart, JC Penney and Macy’s stores. In addition, many “online-only” retailers are starting to open physical stores.
“It’s an exciting time to be in the retail business,” says Benjamin Conwell, Senior Managing Director of Cushman & Wakefield’s e-commerce fulfillment practice. “We’re hearing from more pure-play, online-only retailers that are recognizing the huge value of investing in even a limited physical store presence.” The movement of online chains into the physical world will require some monumental changes in the ways that retailers manage their supply chains, Conwell commented. “It’ll be disruptive, yes, but great opportunities will be created.”
Consider the fact that retail sales in the first quarter of 2017 increased 4.1% as compared to the first quarter of 2016. Certainly some retailers’ sales have decreased, but on the whole, there has been significant growth. According to John Hendrickson, COO of Ramco-Gershenson Properties Trust, “the key to success in today’s evolving retail landscape is to provide value, convenience, and experience.”
You may have heard reference to the “experience economy” which focuses on businesses providing memorable events for their customers. This has become quite true for retail in America. Malls and retailers are working hard to create exciting and pleasurable experiences to attract today’s shopper. Microsoft and Nike have created new and far more experiential retail flagship experiences- and it is working. They’re not alone; retailers who get it are reaping the benefits of providing something more than a simple mouse click for their customers. All in all, with growing sales and a renewed customer focus, there’s a bright future for American retail. So make sure you check the facts of a story before you believe every headline you read these days. The retail sky is not falling!
The author, Charley Babb, is a Principal and Senior Director at Metropolitan Capital Advisors’ Denver office. Charley can be reached at [email protected] or 303-647-1122.