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!!
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>
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>