The End of Retail as We Know It?

Last week I went to shopping in the city and realized that some of small retail shops have disappeared and be replaced by service business such as restaurants and hair dressers. This arouses my curiosity, then there seems to be a lot of Facebook page for online shopping that suddenly come into my attention like my friend online cloth shop, Penny Pence

 I wonder if these two phenomenons are related and this article seems to answer YES!!

 According to Retail change starts online from theage.com.au, Savills Australia states that online retail is growing and replacing the traditional physical retail shops. Internet-driven shopping and low prices have caused consumers to increase shopping online.  This trend will ultimately affect shopping in malls and strips and lead to lost of sales. Here is the evidence that people are migrating to online shopping..

 

Source from ABC Lateline business Report on Online Retail

Consequently, the shopping malls have to customize their mix of retail space to meet customers’ new habits. Many traditional shops will be replaced by food, entertainment and services as the online shopping will not be able to provide such expectations.

This is a realistic prediction of new trends in retail business that we have observed in recent years. As technology brings opportunities and changes for customers and sellers, customers have developed new purchasing habits and different expectations. Shopping in physical stores, customers expect the best services and the best quality of products while shopping through online stores, customers expects lower price, reliable delivery but they are happy to accept less or no services. As a seller, new strategies are needed to be able to survive in this circumstance.

This can include evaluating business leveraging options (Aaker DA and McLoughin D, 2010) that encourage companies to leverage their existing business. And the businesses need to ask such as a following: Is the product market still attractive? Is the core Business still successful? Can the core business be transferred to the new product market? (Aaker DA and McLoughin D, 2010). This set of questions will be a good guideline to current department stores to start thinking how to modify themselves to align with new customer trends.

To sum up, the numbers of physical retail outlets are diminishing and will continue to because the change in customer purchasing behaviour is shifting to online shopping. Department stores need to increase their services function and adapt their businesses by generating multiple ways for customers to purchase, such as creating internet shopping by using technologies like e-catalogues on smart phone applications to update customer about new arrival items and promotions. Then retail outlets can retain a physical store and also attract internet customers. To successfully adapt, retail outlets need to research customer demands (Kotler at al, 2010).

This looks like the next time I go to shopping mall, probably I won’t take my shopping list with me. I’ll just go there just for my coffee and get my nails done!!

Reference:

Aaker, DA & McLoughin, D 2010, Strategic Market Management: Global Perspectives,

1st edn, John  Wiley & Sons, UK.

Hopkins, P 20011, ‘Retail change starts online’,  theage.com.au, 17 August, viewed 30 August 2011,<http://www.theage.com.au/business/property/retail-change-starts-online-20110816-1iwah.html#ixzz1VHMRHfQk&gt;

Kotler, P, Brown, L, Burton, S, Deans, K & Armstrong, G 2010, Marketing, 8th edn, Pearson, Australia.

Optus Business 2011, Ep. 40 – Online retailing growth, 20 July, viewed 1 September 2011 <http://www.youtube.com/watch?v=T6iEoirNJiM&feature=pyv>

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8 responses

  1. I really find this scary, as I love doing shopping in the city, strolling around and enjoying the atmosphere in the stores! Anyway, as you already mentioned there actually happens a change in customer behaviour but I mean that does not necessarily has to be the end of physical retail business. Retailers have to be aware that there is happen a change in customer behaviour, that the customers might have different expectations and finally that they are comparing prizes from physical retail shops to Internet shops. In my opinion, the most important fact is that retailers have to know what satisfy the customer! This is pretty important for future strategies as a satisfied customer has more reasons to come back and repeat purchase!

    • Thank you for your comment Anna! I also like to strolling around and do some shopping in the physical retail shops! But when I came to Melbourne and found that the prices of clothes here are so expensive. That made me start turning to online shopping..so for me..price is a biggest issue that make people migrate to online retail! So this is what physical retailers have to find the ways to compete with online retailers or making some changes around their businesses : )

  2. Yes, Anna, I totally agree with you. It must be horrible if there are no physical stores available in any shopping centre. So Apple, we’d better to do the shopping right now otherwise we will quickly gain more weight (perhaps someday the only way we buy a cup of coffee is purchasing online, oh my god).
    Well, I just kidding, haha.
    I mean it could be true. But I don’t think people would really like it. As we know, the biggest benefits we gain from shopping in physical stores are experience. Such kind of experience can be changed, imitated but it is less likely being absolutely replaced by online shopping. Maybe we could have virtual try-on online, but it is totally different from real experience. So we should have confidences in physical stores cos it is not that easy to be trounced by upstart online stores. Nevertheless, Apple you are right, it is time for physical stores to adopt new strategies to better cater to those savvier customers’ demand otherwise it will lose great market shares and profits to their online competitors.

  3. It’s so sad to see so many retail stores close their ‘bricks and mortar’ shopfronts and switch to online stores. Online shopping is useful for comparing a number of retailer’s prices in a relatively short amount of time but it doesn’t solve the issue of ‘what looks good on the hanger, might not look so good on me’. For this reason I still think the ‘bricks and mortar’ stores have their place in the world. No website will ever tell you exactly how that pair of $200 high heels will feel when you take your first few steps in them, no website will effectively demonstrate that your ‘bum might look big in this’. I agree with you Apple, for retailers to survive the sift in consumer behaviour they will need to leverage their existing business. I think that retailer’s should provide a balanced mix of ‘bricks and mortar’ shopfront locations and online e-boutique to give the option, if rendered necessary, for the consumer to try before they buy.
    Rachel

    • Thank you very much for your comment! I feel the same way as you! I love shopping with my friends in the physical stores so that I can try on those shoes and clothes.
      It is a part of my shopping experiences. Online shopping can’t give this experiences to you! Even though there is a new technology called ‘augmented reality’ that allows you to see yourself on the clothes, I can’t make you feel by touching the real material like trying on your body. ^^

  4. hi apple,
    There are a lot of companies offers a online store that the customer can purchases the proudct from their website. some of them also supply a special discount or free delivery to the customers when they buy it online.for example., a koren clothes website called “ziapa”, they sale colthesm they sale the colthes are cheaper than the customers buy from the boutiqe. and also they offer worldwide delivery. Purchasing online is convenience. by the way, i would like go to shopping mall shopping. because when i buy the product, i can touch the product, and check their quality and metrial are able to me before i pruchases. but, if i purchases online, i can not know the quality and metrial of the prudoct. we can only watch the picture on the internet. i will warried that i buy a bad product. so i think shopping in the shopping mall is better than shopping in the internet.
    cheers
    Queenie

    • Thank you for your comment! I predict that in near future there will be a severe competition in online shopping business as it is low cost to set up and young generation will be the main market.
      Online retailers will increase their service to compete to their competitors as they will rely on ‘words of mouth’ and customer retain. This is because customers have many choices and power of purchasing.

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