Lessons from’Retail Apocalypse’: Invest in Tech, People

Maybe as many as 4,000 brick-and-mortar shops have closed in the USA since this past year, creating what some are calling a”retail apocalypse.” This prospective industry-wide meltdown can teach others, still working, retailers three or more classes about growth and investment.

It might be argued that many of the floundering retail chains failed to invest in people — both employees and clients — and the technology required to serve those individuals.

American Apparel is a manufacturer and retailer which has declared bankruptcy twice as 2015. Picture: Scott Webb.

Apocalypse in Perspective

During June 2017, U.S. retail sales were up about 4% compared to the first six months of 2016, based on U.S. Census Bureau data published July 14, 2017.

Several reports estimate that somewhere between 2,500 and 2,800 new, physical retail shops have opened this year, offsetting some of the aforementioned closures, and in a number of regions, retailers are having trouble hiring enough workers.

So although it’s worth noting that retail sales growth is slow and there are more shop closures than shop openings, the business isn’t on the brink of collapse.

“Talk about the passing of retail is great click bait. Media outlets from The Wall Street Journal into Fortune into USA Today have trumpeted information about store closings, retail bankruptcies, and the conclusion of retail as we know it,” wrote Paula Rosenblum, co-founder and managing partner of RSR Research, a retail analysis company, in a Forbes article from May 2017.

“If we are to believe these posts, we will all be buying from Amazon.com, and malls will end up old age homes for Baby Boomers. Along with the rest of us should just close up shop today, and put a stop to the pain,” Rosenblum continued. “The only trouble with these tales is…they are baloney.”

Why Are Shops Closing?

The retail chains which are suffering, going bankrupt, and shutting shops are a symptom of poor management and a lack of investment over they’re a sign of the retail business’s health.

Actually, the primary problem for many of these chains, such as Payless ShoeSource, RadioShack, Rue21, and The Limited, is the way these companies chose to invest in three key areas:

  • Customer intellect,
  • Business technology,
  • Worker wages and training.

Not investing in these regions stunts growth, and may result in serious issues.

Customer Intelligence

Internet shopping is frequently blamed for the recent passing of so many retail shops. But the actual issue is that the failing retail companies did not know why or how their customers’ shopping tastes were shifting.

Customer intelligence describes the action of collecting, organizing, and analyzing information to learn who your clients are, what they do, and why they buy. Customer intelligence ought to be used to aid a retail business make tactical decisions.

In the first quarter of 2009, online sales accounted for 3.8 percent of total U.S. adjusted retail sales, according to the U.S. Census Bureau. Three weeks later, ecommerce accounted for 4% of retail sales. Six months later, it was 4.1 percent of the total.

In the first quarter of 2017, online sales accounted for 8.5 percent of total U.S. adjusted retail sales.

U.S. ecommerce sales have grown steadily for decades, slowly earning an increasingly greater share of their total U.S. retail sector. This shouldn’t have been a surprise to the shops going bankrupt this year. The transition into ecommerce was predictable and may have been used to grow those companies, not violate them. Graphic: YCharts, using Census Bureau data.

Ecommerce didn’t pounce on unsuspecting retail companies. Rather, companies — that should have recognized almost a decade ago that their clients wanted the choice to shop online — failed to act.

Each of the now bankrupt retailers had the chance to cultivate their companies online but didn’t. In actuality, these retailers had a substantial competitive advantage from the start because they already had established shoppers.

The lesson here is to listen to your clients. Invest in data, research, and analysis to help your retail business succeed. Mid-market retail businesses have a chance in this market if they could understand and fulfill customer needs and wants.

Business Technology

Shoppers have plenty of options. There are dozens and dozens of shops, online or down the road, that sell similar products at similar prices.

Even items that a company manufactures may still have replacements or alternatives in the market.

1 way to compete and grow in an atmosphere of merchandise abundance is to distinguish. For retailers, this may mean focusing on how you market as much or more than what you sell.

If a retailer can offer a better — i.e., differentiated — purchasing experience, that merchant may succeed.

Returning for a moment to some of the retail chains which are closing stores or going bankrupt in this year’s retail apocalypse, it can be argued that they neglected to invest in business engineering.

Mid-market retailers must seek out technologies that help them distinguish, especially online. By way of instance, is personalization something which would help? What about an artificial-intelligence chatbot to answer common questions when they arrive at the middle of the night? How can your company collecting and utilizing shopper behaviour data?

Mid-market businesses may discover the best value using open, scalable technologies.

Our technology services : Magento posshopify posbigcommerce poswoocommerce pos


“Retailers are in a death spiral. For decades, they’ve hired relatively unskilled folks who they cover horribly,” wrote Jeffrey Pfeffer, professor of organizational behavior at Stanford University.

“The current median retail hourly wage of $10.90 is only about 60 percent of the average wage of $16.71. Most retailers supply virtually no instruction to a workforce. Their workforce has a high turnover — the industry average is 67 percent yearly. As many studies show, higher turnover means that people aren’t likely to be quite competent at their jobs since they aren’t there long enough to learn from experience. This leaves under-skilled, under-trained, poorly paid people in understaffed stores”

A number of those failing shops were among the worst in training and paying employees. Do not make this mistake, even if your organization is purely an internet operation.

Mid-market retailers must invest in workers in at least three ways.

  • Pay nicely. Employees, especially those with direct customer contact, should be well paid and content.
  • Train well. Deploy a learning management system to make sure that you’re helping your employees learn and improve.
  • Hire remotely. When possible, do not restrict your employees to a certain location. Sure, someone packing orders will have to come to your warehouse to operate, but a customer service representative, marketing manager, or web developer can be everywhere. When you employ remote, you can pick from a larger pool of skilled workers.

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