What is the Seismic Shift in the Marketplace?
The world of retail is undergoing a seismic shift right now. The good news is that retail sales is growing by an estimated $200 Billion per year and consumers will spend $5.5 Trillion by 2020. The irony is that many major retailers will close stores in 2018 because in-store purchases are declining.
An article in Business Insider projects more than 12,000 stores are expected to close in 2018. That is an increase in the number of closures from 2017 where nearly 9,000 stores shut there doors. There also will be a rash of bankruptcy filings and announcements in the coming weeks. 2018 will eclipse the mark the record year for both store closings and retail bankruptcies set in 2017.
The loss of one anchor tenant can trigger a multi-decade downward spiral for mall owners. Mall owners are fighting, and winning, to prevent some stores from closing their doors.
Why is this Seismic shift occurring
The primary reason for the shift in retail spending is E-Commerce. According to Stephanie Pandolph of Business Insider, E-Commerce is growing almost 4 times faster than store based retail in the past two years.
- In-store sales growth was nearly 3%. E-Commerce sales growth exceeded 15%.
- The bigger issue is that purchases from mobile devices is also increasing.
- Purchases made from mobile devices grew from approximately 7.5 Billion in early 2014 to nearly 20 Billion in early 2017.
- It is also projected that nearly 50% of all sales on the internet will be made from mobile devices by 2021.
- Several studies demonstrate that most online purchases are made from smartphone and that percentage continues to increase.
Her article also revealed several other interesting points. Most consumers prefer to make their purchases by using apps installed on their mobile devices. Yet, most consumers won’t wait more than 5 seconds for an app to load. Consumers might make an initial purchase but they are less likely to go back to the app to make future purchases. Therefore, merchants utilize “push notifications” to reengage consumers. Most consumers keep their apps even if they’re not using them. The retailers who use “push notifications” saw nearly a 10% more purchases completed. Purchasers also maintained a 16% higher value than the average purchase.
Implications for marketers
Mobile marketing is a trending and will continue to rise in the foreseeable future. The retailers who acclimate and adopt to new methodologies the fastest will also benefit the most. There are products available that will assist retailers in pushing their message onto smartphones. To learn more to genusity.com/ThomStark.