With every narrative that speaks about the rise of online retail, it hails its rise to prominence as the force of good that benefits customers immensely. For the most part this is obviously true; online shopping provides lower prices, a more convenient way to shop, and a wealth of product choices. In the midst of all this, plenty of customers do not spare a second thought to struggling brick and mortar retailers. Many feel that after years of charging consumers with expensive products, and taking a big profit margin, they deserve to be in the position where they are in at the moment.
as much as this guy deserved it
as much as this guy deserved it
Despite that, there are several facts that indicate how brick and mortar stores are not only worth saving, but they need to be saved. First, is the fact that retail is one of Australia’sthree biggest employers, the other two being the banking and the manufacturing industry. With so many people working in retail, if retail continues its decline, how will the job market absorb these people?
It would most likely mean that unemployment would rise, starting an unwanted chain of events that shackles Australia’s growth. Furthermore, it is not only the number of jobs that would be lost through the demise of retail, but also the type of people that retail can employ. Its flexible time nature means that it suits part time workers such as mothers or students, workers who would find it very hard to find other jobs that offer the same kind of flexibility.
students: providers of the best kind of service
This situation is not going to happen in the future, it has started happening now. Just late last year, Myer group, Australia’s leading retailer, announces that they will close several of their stores due to increased pressure from stagnant growth and low consumer interest. Smaller retailer WOW Sight and Sound, with 15 stores in 4 states are closing all of its stores, and noted that they will letting go 580 people as a result. Another retail group, Premier Retail, which owns Just Jeans, Portmans, and Dotti, has also announced that they will be closing around 50 stores around the country.
With so many stores closing, many popular shopping streets in Australia’s largest cities can look very sparse. Which brings us to the next fact: a faltering retail sector will lead to a decrease in commercial property development, which will weaken a sector that is considered as key in any economy that is trying to grow, the real estate sector.
Most retailers are already going for smaller store spaces, and going away from the big box store concepts. Lowering prices means that retailers have to sell a lot more of the same item to make the same kind of money. For example, due to the drop of price in most television sets, a retailer such as Harvey Norman needs to sell a lot more units just to survive. This situation has also led some retailers to opt for shorter leases rather than longer ones, to ensure that they have the flexibility to either close or reduce the space that they are renting.
too much space can be pretty weird looking
As it is with every bad news, the silver lining is not far behind. Despite the doom and gloom, there are retail stars out there such as Zara, Topshop, and the always busy Apple store. These retailers have been able to generate turnover that is similar to large department stores while operating from a much smaller space, therefore paying a lot lower rent. This might be the future of successful brick and mortar stores, with more specialized products and services, in better defined spaces.
