Thursday, April 27, 2017

Shifting Ground

Bricks and mortar giving way to e-commerce and home delivery. 

The ground is shifting under bricks and mortar stores. Empty storefronts and abandoned big box spaces contrast with bustling warehouse parks.

The profound reordering of the shopping scene in New York reflects a broad restructuring in the American retail industry, said The New York Times. E-commerce players, led by industry giant Amazon, have made it so easy and fast for consumers to shop online that traditional retailers are struggling to compete.

This shift has been building for years, but has been speeding up and appears to be reaching a tipping point, say experts. Mark Cohen, a former Sears executive who now runs the retail studies program at Columbia Business School, called it a “sea change” in the retail industry.

Store closings are on a pace to eclipse the number lost in the depths of the Great Recession. But unlike then, the recent torrent of closures comes as consumer confidence is strong and unemployment is low, suggesting a permanent restructuring, from which traditional retail may never recover.

This transformation of the B to C market is a profound, long-term phenomenon, and will affect some product categories much more than others. Bricks and mortar won’t disappear any time soon, but if you’ve ever had someone refuse cash when you tried to make a purchase, you know a major shift is underway.

The changes in retail are bringing concomitant changes in logistics, with goods increasingly routed to online distribution centers rather than retail stores, and the last mile for B2C products handled as package deliveries. Massive job losses in retail will not be offset by increased employment in increasingly automated DCs and related businesses.

The world is changing – fast – in many ways. The corner store could go the way of the video store, and more than ever, supply chain efficiency is king.

Kirk Shearer

800-989-0054 x103

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