Sears Closing Image

Going Back to Physical Stores

From some year, e-commerce has grown noticeably in many market areas. But it seems that some companies are investing in physical stores, too.

One example of this trend is Amazon, king of online shopping, which spends more than $14 billion to buy Whole Food with its 500 physical locations.

This new revolution is taking place during what it was supposed to be a “retail apocalypse.” Bankruptcies are connected to clothing chains which are limited by shopping spaces and significant debt obligations.

This particular situation might mean that retail industry is at a critical point where e-commerce companies understood the value of storefronts. In the case of Amazon, the company had a small upward in online shopping in those regions where it opened physical stores.

According to Citi Research analysis stated that “Five years from now, we won’t be debating whether ‘e-tailers’ are taking share from ‘brick & mortar retailers,’” this is “because they are all the same.”

This inflection point in retail might have huge consequences on the national economy, regional inequality, as well as, on the labor force. Several department stores are closing due to low sales in urban areas, but rich urban and suburban stores try to be more like showrooms.

Four Relevant Implications

Shopping by Barcode

1. “Let’s go to the mall to buy stuff online.” It is the new slogan for shopping.

The amount of malls occupied by retailers which started online grow around 1000 % since 2012 because they were able to reach a new kind of customer, Millennials. These type of shops do not work with inventories, they place orders at fulfillment centers, and then, products are shipped to their doorstep.

Abandon Mall

2. The transformation would bring about inequality problems.

Well-known online stores like Warby Parker prefers to open stores in its most profitable zone. As Amazon did when buying Whole Food, which gave the company a good result in affluent downtown areas and high-income suburbs.

On the other hand, suburban malls in lower areas are really struggling. There are departments stores closing in many places, which would represent empty commercial spaces and a crisis in the local economy and the community.

Amazon Box Filler

3. New role: box filler instead of cashiers.

When having a shop. The cashier is considered one of the essential jobs involved. In the US, more than 3.5 million workers are cashiers. This profession is being threatened due to the changes in shopping. As purchases are online, there is no need for a cashier.

It seems that E-commerce is helping shopping being more productive, mostly by replacing the vast majority of consumer “work.”. All activities which are not paid is being turned into paid work in fulfillment centers. These events might include filling and shipping orders; they have added more than 400.000 jobs in the last period.

Self Driving Cars

4. Self-driving cars.

Self- driving cars seems to be a potential idea within the retail companies, they are thinking about autonomous vehicles like the latest commercial real estate. Brands such as Walmart and Amazon would be more than happy with this idea because they need cheap alternatives to deliver products to people’s doorsteps.

This thought might be seen as a futurist wish.  However, it is universally predicted by software companies and auto manufacturers.  Taking the idea to retailers world, it could be said that self-driving might start as an independent truck which might help to empty urban and suburban malls, flood the streets and might cause traffic, mainly for non-commercial drivers.

Although it may be impossible to know how these regulations and autonomous technology would infer on e-commerce, one can imagine what might happen in a few decades with online shopping. It could be considered a breakthrough, a profound change in shopping that might be adopted as a national legacy for retailers.