Debunking the persistent retail apocalypse talk, RSR’s 2018 Store Report finds far more retailers are planning to open stores than close them in the near term.
Defining retail “winners” are those with comp-store sales above the industry average 4.5%, RSR found that two-thirds (66 percent) of those high performers and 48 percent of “all others” expressed plans to open new stores in markets where they already operate. Even more encouraging, 55 percent of winners said they’ll be expanding into new markets, a sentiment shared by 41 percent of the rest of retailers.
And the positive store news don’t end there.
Retailers are also seizing the opportunity to convert existing real estate investments into more desirable, customer-friendly formats, with 47 percent of winners and 32 percent of remaining merchants confirming plans to overhaul some of their brick-and-mortar locations.
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Of course, retailers are continuing to rationalize their physical footprint, and closing underperforming locations is a part of the retail evolution. However, just 19 percent of winners told RSR they’ll be trimming their store fleets, plans echoed by 23 percent of the other retailers.
Though retailers are optimistic about the future of the store’s relevance in the overall shopping landscape, they readily acknowledge the headwinds contributing to a challenging environment. Not only are consumers still price conscious, 54 percent of the 182 surveyed retailers said, but 49 percent protested that “online competitors innovate too quickly for us to keep up.”
Is that a thinly veiled reference to Amazon? Probably.
They might be slow to execute, but retailers understand that stores need to take more of a cue from e-commerce. Asked about the most important opportunities to improve brick and mortar, 60 percent of all surveyed retailers told RSR that physical stores need to mirror what consumers most appreciate about shopping online. Another 52 percent see the store’s potential to more fully embrace a role in fulfillment and offer customer-centric options like same-day service and direct delivery. A significant portion want to further entice valuable omnichannel click-and-collect customers, with 43 percent interested in incentivizing these shoppers to interact with more of the store environment and merchandise when they stop in to pick up an order.
RSR’s findings confirm the road retailers should take if they want to ensure a fruitful future. Whereas previous research found e-commerce companies admitting they need a real-world footprint, this store report uncovered the polar opposite: that brick-and-mortar merchants need to bring more of a digital influence into their four walls.
“This is a tremendous learning moment as shopping melds into one large, converged experience,” RSR wrote. “[Retailers] realize the best thing they can do is evaluate the more desirable aspects of each touchpoint and carry them through to an engaging—and consistent—shopping experience in both the physical and digital worlds.”
