- February 8, 2019
Many of the biggest retail stores closed in 2017 and this continued into last year. Big brands - Payless, Rue 21, RadioShack and Toys R Us, were some of the hundreds of retailers which filed for bankruptcy. The cause for the failure has often been attributed to increased e-Commerce. The Internet has not only become a channel for marketing and advertising but a virtual space for businesses to sell their goods and services. But has the Internet taken over the traditional brick and mortar model? Or have some businesses not adjusted to the new technological world which drives the retail industry? What does this mean for businesses in the Caribbean?
Centuries Old Model
In the 19th and 20th century, businesses were able to flourish through the Industrial Age and beyond as more people had access to disposable income due to the availability of credit. The dawn of the 21st century changed this as more businesses saw the economic benefit (low operational costs, less staff etc.) and increased access to the Internet which allowed them to reach more customers globally.
A Different Way To Do Business
The accessibility of the Internet has even changed how many governments perform daily transactions as they too opt to do business online. In 2019, in the Caribbean, USA and Europe, more countries are exploring the idea of providing online services like filing forms and paying bills, in an effort to improve client experience and lower costs. Over the first decade of this century, there has been a gradual shift from brick and mortar to online shops. A retail research firm senior executive, Garrick Brown of Cushman and Wakefield reported that in the US alone there were almost 9000 closures of brick and mortar businesses. It was estimated that 11,000 more businesses halted their operations last year.
The fact is that the modern shopper has a different concept of retail. These individuals do not mind shopping online but they still prefer a more personable experience that takes less time but still gives value for their money. This trend has lead to evolution of the brick and mortar model.
Changing Shopping Experience
The modern shopper wants a personal experience i.e. they want to interact directly with the business while “shopping small”. They are comfortable with both the online shopping experience and going to small shops to buy quality personalized goods. Customers want to visit a store where there are comfortable surroundings, free coffee and a relaxed atmosphere. Big box layouts are becoming a thing of the past especially when a person can buy whatever they want from their living room online. Today’s shopper, both Millennials and Generation Z, are technologically savvy but like to see products in store before buying online. In The Bahamas, one long time retail business cited online shopping as a factor affecting profitability. The Caribbean state has also reported a 2 billion dollar loss to online shopping and shopping in Florida in 2018. Statista highlighted that “in 2011, annual e-commerce sales in the Caribbean amounted to 2.75 billion U.S. dollars, up from 1.9 billion U.S. dollars in 2010.” Social media site Facebook is also challenging local retail markets as all users can join for free and advertise their goods and services directly to clients via virtual market place. The shift to online shopping has certainly reached our shores and business owners must explore new and modern ways of keeping clients.
Sources:
https://fitsmallbusiness.com/death-of-brick-mortar-retail/
https://www.statista.com/statistics/256195/annual-b2c-e-commerce-sales-in-the-caribbean/
http://www.tribune242.com/news/2019/jan/11/taylor-industries-insolvency-forces-40-staff-redun/?news