No Dummy, Amazon Didn't Kill Macy's

Macy'due south and Sears—two venerable section store pioneers—recently announced mass brick-and-mortar closures and layoffs galore. More 10,000 Macy's employees will exist sacked and more than 100 stores will be shuttered. Sears will close more than 150 stores, but it is not immediately clear what volition happen to the employees at these locations. You'd be remiss to think these struggles are isolated to just a few of the big, old brands. Y'all'd be wrong. J.C. Penney, Kohl's, Sports Authority, Walmart, and Ralph Lauren have all begun to wind down their brick-and-mortar operations. These failures beg the question: What is killing off the retail industry vanguard?

The obvious immediate guess would be the continuing consumer shift to e-commerce, particularly online shopping via retail brand-independent outlets like Amazon, which just appear its intention to add together 100,000 jobs over the next xviii months. The hypothesis would follow this logic: Amazon makes shopping cheaper and easier than its brick-and-mortar-focused competitors. People don't want to walk into a mall the calendar week before Christmas to buy a product when they can purchase information technology from their sofas and have it delivered inside 48 hours. Makes sense, right?

Although Amazon'southward influence (and general due east-commerce as an extension) has certainly played a role in pain brick-and-mortar sales, it admittedly can't be held responsible for this sudden department store pandemic. Hither's why: Retail sales in the U.Southward. eclipsed $iii.four trillion in 2022, according to Forrester Research. Of those sales, which account for online and in-store purchases, simply 9 percent of shopping was done online, amounting to roughly $306 billion—a nice chunk of change to be sure, but certainly non enough to topple the brick-and-mortar industry.

"This is non a reflection of a weakness in the retail industry," said Brendan Witcher, Principal Analyst at Forrester Research. "Retail has never been stronger."

(Image via: Euromonitor International)

"Information technology'due south the Economy, Stupid" (No, Information technology's Not)

So, if information technology isn't that e-commerce is cannibalizing in-store sales, the next likely hypothesis would be that Macy's and Sears are suffering through a by and large poor economy—a solid theory in most other economic climates, but a totally incorrect one today.

The Consumer Conviction Alphabetize is at its highest bespeak since 2003. The Index takes into account consumer sentiment almost the overall economic system, jobs, and income. 2022 holiday sales volition exceed $1 trillion—a iii.6 percent to 4 percent increment over 2022, according to Deloitte. Year-over-yr sales as well increased 3.8 per centum, and they're expected to increment over again in 2022.

Okay, so if it's not online shopping, Amazon, or a bad economy, then what's killing off the Macy's and Sears of the earth? Co-ordinate to Witcher, it'southward just plain old poor business practice. In other words: No i wants to go into Macy's and Sears anymore. Although Witcher refused to speak most any specific retailer, he said the brick-and-mortar shopping experience at failing retail stores has get homogenized and stale.

"Nosotros're at a point where there'due south more retail square footage than always before and more retailers inbound the market," he explained. "More importantly yous've got organizations that need to work on their make to differentiate themselves. If you lot plop a consumer down in any one of these [big department] stores they wouldn't know [which store they're in]."

What'south the Solution?

Decades ago brands were celebrated for being the one-stop-shop for all of your retail needs. You could walk into a Sears store and purchase your habiliment, your tools, your fishing gear, and that experience was satisfying. Witcher contends that today's retailers have to provide unique shopping experiences that cater to a specific niche customer segment.

"Today's consumers don't get excited about walking into a shop and pulling something off a shelf and pulling something out," he said. "Everything is a game. Everything is digital. Retailers have to pay attention to creating a unique customer journey. Nobody says to themselves, 'Gosh, I hope I can become into a store and stand in line for 15 minutes'. No, I want to shop and motility on with my life."

Witcher pointed to Amazon every bit proof that online commerce isn't the reason stores like Macy'due south and Sears are struggling. If in-store commerce were dead, then why would Amazon invest in pop-upwards retail locations, physical bookstores, and Amazon Get grocery stores? Wouldn't the company entrench itself farther in digital in order to maintain its eastward-commerce stronghold?

For Witcher, Amazon Go represents the prime number (pun intended) case of a brick-and-mortar experience built for the digital age. With Amazon Go, you can walk into any affiliated store, open the Amazon Become app on your mobile device, browse your phone on the manner in, grab all of your goods, and walk out of the shop. Yous don't need to hand over cash or a credit card, and you don't need to worry about grabbing a print-out of your receipt. You'll still have to get off your sofa, but you lot won't ever accept to stand in line again.