Some are calling it a “retail apocalypse” in the United States due to mounting store closings and bankruptcies. The crisis puts the focus on mid-tier retailers like Sears.
The factors spurring the transformation of retail are also playing out in Canada, but the impact isn’t as alarming, say analysts.
For now, the shakeout is not simply an issue of Amazon eating everybody’s lunch. The growth in online shopping is undeniable, but it is still a small piece of the pie. Statistics Canada reported that in January, on a year-over-year basis, total retail trade rose 3.4 percent while its retail e-commerce portion, which makes up only 2.7 percent of the total, rose 17.2 percent. In the United States, total digital commerce makes up just 10 percent of retail sales.
The impending death of mid-tier retail and the overbuilding of retail space, particularly in the United States, are also catalysts behind a major disruption.
Death of Mid-Tier Retail
Sears is arguably the poster child for retail’s woes and its management recently expressed doubt that the store can continue as a going concern.
“Consumers no longer see a reason to shop them. Why would they, when they can go online and get their desired items at a reasonable price and often delivered in the next day or two,” said Mladen Svigir, principal at consulting firm Jackman Reinvents, in an email.
Aggregator stores, like Sears, are caught in no man’s land. At the upper end, companies are also investing in stores to create a memorable shopping experience.
Some higher-end brands may not just want to be in an aggregator store—for example, Zegna could be in a Saks or Nordstrom—but also have their own stores, business strategy adviser Mark Satov of Satov Consultants said in a phone interview.
