Retail Observer

RETAILOBSERVER.COM OCTOBER 2022 52 W hen I was growing up, there was a PBS show called Lamb Chop that I watched. Although it ran for just three years, it had a lasting pop-culture impact – thinking of "The Song That Doesn't End" still plants a worm in thousands of people's ears. (Sorry!) Speaking of ear worms, there's a debate floating around the retail industry that has truly outstayed its welcome: the alleged impending death of brick-and-mortar retail. Every so often, the industry analysts get themselves worked up about the "retail apocalypse," or the "demise of brick-and-mortar." It's been going on for at least a decade, as the e-commerce world has expanded. Those headlines may be a great way to generate page views, but if you follow the actual retail industry data, they tell a vastly different story. Let's dive into some truths about the retail industry that will help you understand what's really going on. BRICK-AND-MORTAR ISN'T GOING ANYWHERE In 2020, e-commerce accounted for about 18 percent of total retail volume globally. The number is expected to rise, and it shows that over 80 percent of retail sales are still in-store. The pandemic accelerated the growth of e-commerce, but even so, retailers have had success turning those digital purchases into in-store visits. Buy-online-pickup-in-store (BOPIS), which exploded in the last two years, drove over $72.4 billion in sales in the U.S. last year alone – a 107-percent increase over 2019. If that's not enough to persuade you of brick-and-mortar's staying power, the NRF shared strong numbers from Q1 2022 that show U.S.- based retailers plan to open 4,400 stores and close only approximately 635 stores this year. Those figures follow the trade association's 2021 store openings report that showed U.S. retailers opened twice as many stores as they closed. Another reason in-person shopping remains important: consumers enjoy the experience. According to Morning Consult's recent State of Retail & E-Commerce report, more than two-thirds of shoppers prefer to do their browsing in-store, especially when it comes to home furnishings and appliances. Hard data from the U.S. Census Bureau also show that in-store shopping isn't just surviving, it's thriving. Coming off a 2021 that saw in-store retail sales across the U.S. rebound tremendously after the "great re-opening," the year-over-year data continue to impress. In July, in-store retail sales in the U.S. were up 10.3 percent over last year. And that follows May and June data that were up 8.7 percent and 8.5 percent respectively. THIS ISN'T AN INDEPENDENT PROBLEM Businesses open and close every day – independents included. But the conversation around the death of the physical store has not been driven by a great exodus of family-run businesses. Rather, it's the regular announcements by big-box brands that they're closing shop, leaving gaps in strip malls around the country that fan the flames of this debate. In the past few weeks alone, it's been reported that sports retailer Olympia was closing all of its 70 locations. Bloomingdales and Sears are paring down their store counts even further, Bed Bath & Beyond plans to close 150 locations and lay off 20 percent of its workforce, and the list goes on. At the recent PrimeTime in Orlando, Wells Fargo economist Charlie Dougherty talked about how the economy is normalizing back to pre- pandemic times. The same is likely true of physical retail space, particularly when it comes to big-box locations and malls. There's no denying that American consumers love to shop, and that it has led to a major influx of physical retail locations over the years. What other country has not just one but 22 malls with at least 2 million square feet of leasable retail space? None. That's the answer. As of 2018, the U.S. boasted 23.5 square feet of retail space per capita. The next-closest countries, Canada and Australia, check in at 16.8 square feet and 11.2 square feet respectively. You'd have to combine the per-capita square footage of the U.K., Japan, Netherlands, France, Switzerland and Spain (countries ranked 4-9 on the list) to outpace the U.S. ever-so-slightly – those countries total 23.9 square feet combined. To reiterate, this isn't an independent retail problem. The empty spaces in our strip malls and major shopping centers are due to overexpansion by large businesses. It's why we see malls being repurposed across the U.S. in unique ways, and it's why independents are moving into those abandoned locations to better serve their communities. NMG member Queen City Audio Video & Appliances plans to do just that in Winston-Salem later this year when they complete their takeover of a shuttered big-box office location. Long story short, don't let news of the death of brick-and-mortar scare you. You've lived through at least six supposed retail apocalypses in the past decade, and if the last two years have shown us anything, it's that the independent channel has always been and will always be a resilient bunch. So, just hum along while that never-ending song keeps playing. Rob Stott is corporate communications manager for Nationwide Marketing Group RO Rob Stott Retail Trends THE TRUTH ABOUT "THE DEATH OF BRICK-AND-MORTAR"

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