Despite gloomy predictions, retail industry sales rose 4.6% last year, and ecommerce has not come close to replacing physical stores. This looks more like a Retail Renaissance than a Retail Apocalypse.
found that the newest customer cohort, Gen Z, believes by three-to-one that physical stores provide a better shopping experience, and 71 percent of consumers under 30 years old said they shop for clothing mostly in stores.
From his perch as a landlord, DLC’s Ifshin sees the trend in physical retail reflecting a generational shift. “Millennials are into experiences,” he says. “Clicking a mouse on Amazon is not an experience. So, we’re seeing a lot of activity with new tenants likeIfshin identified another category that he considers a reliable trend—hospitals that want to redirect non-emergency visits and services are off-siting more than just urgent care facilities.
The mall of the future may be where Millennials go to the gym, where they get their checkups and medical testing, and where they go to look at the clothing they’re interested in after shopping online, a potential solution to the returns problem. In some categories, like women’s shoes, the return rate at some online retailers ranges from about 25 percent to as high as 50 percent. That may in part explain whyfound that ecommerce retailers plan to open 850 physical stores in the next five years.
Ifshin predicts that the Amazon model—razor-thin margins on retail sales subsidized by the company’s hugely profitable cloud computing services—is unsustainable. “It reminds me of the airline industry in the 1980s when carriers like People Express disrupted the market by selling tickets below cost. People got used to cheap airfares and a lot of carriers ended up going bankrupt.”
He predicts that the evolving renaissance in physical retail will be fueled by younger generations of consumers who like to shop online but prefer to buy in-store. “Ship-to-store,” he says, “will one day kill Amazon.” Unless, of course, Amazon decides to build out a physical retail presence. The company’s recent decision to partner with
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