Today’s consumers are actively seeking more convenient channels to purchase and receive products in a timely manner. With an increase in the accessibility of the internet, more and more customers are turning to the web to fulfill their shopping needs. This demand evoked onto companies by said consumers is reaffirmed by the copious closures of brick-and-mortar stores- a trend named invariably as the ‘retail apocalypse’ by media outlets.
Repositioning Marketing Strategies
On Thursday, Tesla’s CEO and former Chairman Elon Musk, delivered a much anticipated announcement concerning the manufacturing, sales and marketing of the automaker’s Model 3 vehicle. A press release from the announcement revealed that last year, “78% of all Model 3 orders were placed online rather than in a store.” This statistical finding influenced the company’s decision to reduce its number of physical stores- only keeping those present in high traffic areas active. Additionally, these remaining Tesla stores will only be used as galleries and information centers with the hopes of influencing potential buyers to purchase a car online. Arguably the biggest and most shocking takeaway from the announcement is Tesla’s plan to conduct its sales exclusively online.
Amazon is another company that has taken note of the emergence of online sales growth by implementing plans that proactively satisfies the channel preferences of consumers. Unlike Tesla however, the e-commerce giant has began to actively multiply its number of convenience stores labeled Amazon Go. The catch is that the Amazon Go stores are completely cashless and all transactions are completed using the Amazon Go app. Once customers use the Amazon Go app to enter, they can then proceed to shop and once they select a product of their choice, it is automatically added to their virtual cart and charged to their online Amazon account.
As can be inferred, the Amazon Go stores are completely dependent on the Amazon Go app in order for them to operate efficiently. As of today, there are currently 10 of the stores open and according to Bloomberg, “Amazon is mulling plans to open as many as 3,000 Amazon Go locations by 2021.”
Companies That Have Failed to Make a Change
I’ve referenced the term ‘retail apocalypse’ throughout this blog but have yet to mention exactly who has succumbed to its detrimental wrath. The downfall of the 70-year old beloved toy retailer, Toys ‘R’ Us, was balanced by a lack of investment geared towards fulfilling orders via its website and stiff competition from e-commerce rivals like Amazon who can be directly linked for this phenomenon.
Moreover, just this month, Payless announced plans to close all of its 2,100 US locations as well as their online store. The discount shoe retailer has become the latest company to fall victim to the retail apocalypse. The company’s online presence was outmatched tremendously by competitors such as DSW who offers both a wider variety of products and a friendlier user interface for customers on their online buying platform.
Consumers are seemingly becoming more comfortable making online purchases. Whether it is a testament to the quality of goods retailers are offering or just merely for convenience sake, it is imperative that company’s begin to focus their efforts more on expanding their online presence.
By: Dezmond Nation