120 Days of Retail: Day 44 - If It's the Retail Apocalypse, Why Are People Starting New Stores?

It occurred to me today that the retail apocalypse isn't actually a thing, and that this was cause for celebration.

I know running a retail store is hard. It's still the case that about 20% of small businesses fail in their first year, according to the magazine Entrepreneur. The restaurant first-year failure rate is even higher.

But what we do know is that despite the post-2008 department store and shopping mall collapse that happened following the Great Recession, and despite articles from the Covid-19 pandemic that brick and mortar stores are dying and will never return, people are still creating businesses and starting stores.

In fact retail growth is pretty healthy. As I noted in my Day 24 blog post, the retail sector grew 7% last year and is expected to grow 5% this year, even with the higher interest rates and some consumer pullback. While online shopping is growing faster than in-person stores, both categories are nonetheless growing, and in-person shopping remains the much larger share, of the two, according to the National Retail Federation.

One clarifying statistic that hints at the continued importance for retail is that even among so-called "Direct to Consumer" online stores that have no physical presence, 30% consider starting a physical brick and mortar store a top priority, according to NerdWallet, a finance blog.

Some industries are even stickier. According to the same article, 70% of fashion purchases are still made in-store, which probably would come as a surprise for the Millenial and Gen Z kids who grew up ordering discount clothing from Shein and Wish. But it does make intuitive sense considering one of the top reasons people still go to stores is to try on items before buying, something that no amount of VR or online photos could replicate.

According to retaildrive.com, the reasons customers cite for still wanting to shop in-store are the following:

1. To try out items before purchasing
2. To take items home immediately
3. Returns are easier in-store than online
4. They enjoy the in-store shopping experience
5. They want to ask questions to store associates

Although shoppers' preferences are changing and ecommerce isn't going anywhere, the image of the "retail apocalypse" where every product you buy comes in a box from Jeff Bezos and every former store is boarded up, is completely false. Rather, 80% of companies, including physical retailers, are moving to an omnichannel experience for shopping. In non-nerd speak, that simply means having both an online and offline presence, according to the same article.

Physical retailers should delight in knowing that in fact- although many consumers do now research an item online before purchasing, often that research still ends up in an offline purchase. According to a survey conducted by Google, "76% of people who conduct a local search on their smartphone visit a business within 24 hours".

So is the retail apocalypse happening? In short, clear terms- hell no. Rather, retailers need to embrace the new mediums available to ensure a fluid online-to-offline experience and make shopping in-store enjoyable.

But getting online is hard, technical, expensive, and time consuming. Businesses can leverage ListIt to display their products to local customers for free by simply listing their inventory from their phone or computer. It's free to use and listing your products is as easy as posting to Instagram. We hope you'll give us a try.

ListIt is the Buy Online Pickup In-Store solution for local retailers. It’s free and takes only seconds to upload your first product. We’re launching April 2023. Have questions? Reach out to me directly at james@listit.one and be sure to check out our website for updates and the beta product sign-up. Coming this April, 2023!