There is no denying it…2016 was a rough year for various brick and mortar retailers. The 2016 holiday season wasn’t as merry as industry pundits anticipated, resulting in the following store closures:
- Hancock Fabrics: Filed chapter 11; all 255 stores
- The Limited: Filed chapter 11; all 250 stores
- Office Depot/Office Max – Merged; closed 400 stores
- Sears / Kmart: Closed 142 stores (10% of its store base)
- Sports Authority: Filed chapter 11; all 140 stores
- Macys: Closed 100 stores
- American Eagle: Closed 150 stores
The ‘Amazon’ Effect Takes a Bite Out of Brick & Mortar
The root of their problems may lie with a company that isn’t even competing with them for customers at the mall: Amazon.com. Amazon has been poised for success in its pursuit of relentless innovation and a seamless blend of the warehouse processing efficiencies with the e-commerce shopping experience.
It is estimated that Amazon makes up about 7% of the U.S. apparel market, and that figure is predicted to increase to 19% by 2020 (Barrons 2016). Moreover, the 2016 “State of Amazon” study revealed that Amazon is often involved in almost all online shopping activities (Consumer Goods Technology 2016). Approximately 9 in 10 consumers will check Amazon even if they find a product they want on another retailer’s website.
Blurred Lines & Blended Commerce – The Changing Face of Retail
Today’s consumers float freely from physical shopping to virtual experiences as traditional and modern shopping models unify into blended commerce. Pure e-commerce retailers are evaluating retail store fronts, while traditional brick and mortar retailers are rapidly pursuing online and mobile commerce channels.
“The shift in retail to the Internet is a huge change… every retail company is trying to manage the transition. It’s not well defined or understood and there’s no road map” said Simeon Gutman, a retailing analyst for Morgan Stanley (New York Times 2015).
Given the consumer’s lofty expectations for an integrated cross-channel shopping experience, there is a steady race to remain relevant in a hyper-competitive retail environment.
While Amazon is expanding its physical presence, Walmart is strengthening its ecommerce strides (eMarketer 2017).
At the beginning of 2017, Amazon announced that it will open its newest brick-and-mortar bookstore in New York City. At the same time, Jet.com – a Walmart subsidiary – announced that they purchased online footwear retailer ShoeBuy.
Achieving Operational Excellence Between Brick And Click
Clearly, today’s world of commerce requires a multi-pronged approach. Trying to match the convenience of Amazon with an integrated supply chain with personalized and trusted product content is no easy feat.
A connected commerce approach supports a harmonious model in which transactional and product data work together to optimize the supply chain process.
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- “Amazon Could Be Largest U.S. Company by 2020.” Barrons. 2 June 2016, http://www.barrons.com/articles/amazon-could-be-largest-u-s-company-by-2020-1464866783
- “Amazon Set to Dominate 2016 Holiday Shopping”. Consumer Goods Technology. 27 September 2016. https://consumergoods.com/amazon-set-dominate-2016-holiday-shopping
- “Walmart Plays Catch-Up with Amazon.” New York Times, October 22, 2015. https://www.nytimes.com/2015/10/23/business/walmart-plays-catch-up-with-amazon.html?_r=0
- “Omnichannel 2017: Amazon and Walmart Make Moves”. EMarketer. 9 Jan 2017. https://www.emarketer.com/Article/Omnichannel-2017-Amazon-Walmart-Make-Moves/1015000