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Important E-commerce Trends for Your Community

It is no surprise online sales continue to rise. E-commerce started in the 1960s and has grown to the $513 billion online retail industry we have today (U.S. Census Bureau Department of Commerce, 2018). As e-commerce grows, retailers and restaurants are having to learn how to balance both online and in-store sales channels. From dining delivery and apparel rentals to a reduction in the number of brick-and-mortar stores, city leaders need to know what is happening nationally and locally to make informed retail development decisions.

With the rise of online sales, communities nationwide are seeking answers to questions, such as, how much shopping is done online? Are retailers still opening stores? Are people still dining out? The following will provide answers about these important retail trends that every community leader should know.

How much shopping is done online?

Despite the high utilization of social media and online platforms, people still inherently crave face-to-face interactions. To date, 19% of all sales came from online channels. Pure play retailers fulfilled 10% and the remaining 9% of online sales come from traditional retailers.  Projections show e-commerce growing to 26% of retail sales by 2021 and stores to be involved in 81% of all retail fulfillment that same year. 

Most retailers today have developed some sort of multi-channel sales capability, such as omnichannel initiatives, i.e. buying online and picking up in store. While online shopping has increased, the majority of retail sales still take place in-store and research shows a store closing in a region will also cause online sales to decrease in the region. In conclusion, there is not an online vs. in-store battle. The industry is trending towards a multifaceted approach in response to changing consumer shopping behaviors.

Are retailers still opening stores?

The short answer is yes, 2019 has proven to be a year of growth for many retailers. Retailers have announced 2,965 more openings for 2019 than closings, with a large portion of the closures being attributed to missteps and failure to reinvent themselves with omnichannel and experiential strategies.

As a community leader, it is vital to know which store segments are expanding. Since January 2017, department and specialty stores have closed a net of 9,651 stores; however, outside of these two segments, other retail segments have had a net increase of 18,226 stores.

The decline in 2019 is primarily focused on a select group of 20 companies, most of which are in malls. Sixteen retailers represent 73% of retail closures, with Payless, Gymboree and Ascena being at the top of the closure list.

Overall, retailers are still opening stores, but many mall-based stores are struggling. In order to be successful, malls must look for non-traditional stores, especially at B or C mall locations. Malls must shift to drive more traffic with uses like healthcare, office space and experiential retail. It is vital to ensure your community’s mall is keeping up with the evolving consumer behaviors related to experience, convenience, omnichannel and consultant-based shopping.

Are people still dining out?

Restaurant sales increased by over $55 billion from Jan. 2018 to June 2019, which proves Americans love dining out. This is a sector that has experienced a tremendous evolution and need for bolstering consumer convenience. The increase in mobile order-ahead and delivery options has sped up the process of modernization and expansion of restaurants. 

Restaurant sales are up by 4% in 2019. Store openings are up too. For each restaurant company closing stores, six are opening stores. Similar to the retail industry, store closures remain concentrated in just a handful of brands. Sixteen chains represent 69% of restaurant closures; Subway and McDonalds have an aggregate of 43,000. However, this is less than 1% of their total, which has little impact on operations.

The Retail Evolution

The retail evolution driven by changing consumer behavior cannot be ignored. The most important trend that your community needs to remember is that while e-commerce sales are on the rise, retailers and restaurants are still opening locations. While there is a great deal of closures, even great retailers and restaurants close stores each year. The reality is that only a handful of retailers are responsible for the total closings in the last three years.

As a community leader seeking retail development, you must be aware of the relevant trends and know which retail and restaurant segments are expanding. This is vital to creating an actionable plan and retail roadmap to drive growth to your community.

Ready to get more out of your retail development efforts? Read our tips on maximizing your retail recruitment strategies.

Journey Awareness Persona Economic Development/Elected Official City Government