Stats and thoughts mentioned below are a summary of this article published by Deloitte.
The Retail Renaissance
Contrary to popular belief, retail is not dead. And small business retail is not dying due to those darn millennials shopping on Amazon. (which by the way, we do build Amazon shops– shameless plug I know). In fact, researchers have found that:
“Premium retailers have seen their revenues soar 81 percent over the last five years, while price-based retailers have seen their revenues steadily increase 37 percent over the same period.”
Why Are Retailers Failing?
According to the stats above, retailers are not actually failing. The reason why the perception of retail death exists, is because the largest sector of retail, the “balanced retailers”, only grew 2 percent in that same time period. These retailers don’t fit into premium or price-based categories, and are closing stores left and right; i.e. J. Crew, Sears, and Macy’s. These “balanced retailers” who focus on price and promotion propositions to create value, are being hit the hardest for two main reasons:
Lack of Target Market Focus
What’s the first step in creating a business? Defining business goals and comparing this to your target market and current consumer. But the part that we often forget, is that those markets can change in time. It’s important to consistently evaluate your targets with your actual market.
A Need for Niche Retail
With the current socioeconomic status changes in the United States, we are rapidly losing the middle class. Bottom income earners are barely making ends meet, while the middle class has much less discretionary income than before. Meanwhile the top income earners have more discretionary income than ever; creating a gap in the need for “balanced retailers”. Instead, businesses need to decide on a niche, and pick between premium or price based value. The jack-of-all-trades route will no longer prove to be a fruitful endeavor. We have too many options.
How Can Small Retailers Survive?
The point? Find your sector, and market to them. Don’t try to be a jack of all trades, your business needs a niche, and you need to stay current on your market research. We can help with that. Consultations are always free, we GENUINELY enjoy small business think tanks; so, reach out. We’re here to help!