Will Retailers Have to Restructure in 2016?

John Krautzel
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Two major trends during the 2015 winter holiday shopping season emerged for retailers, and these shifts in consumer spending may cause national chains to rethink sales strategies in 2016. Online shopping and off-price stores gained market share during the holiday shopping rush. Larger, traditional retailers that don't pay attention to what happened could falter due to this paradigm shift in how consumers shop.

Online shopping and Internet sales took off in 2015, but this came at the expense of brick-and-mortar purchases. Amazon, in particular, captured a whopping 26 percent of all online sales in 2015, up from 22 percent in 2014. Americans spend up to 51 cents of every $1 of e-commerce spending at Amazon.

To adapt and keep pace with Amazon's robust sales model, traditional retailers may have to cut staff and close stores. Online shopping rose 23 percent overall in 2015, and that percentage could remain the same, another 23 percent rise, for 2016, if trends hold. Brick-and-mortar retailers must rethink their core business strategies as consumers move away from browsing store shelves to searching online catalogs.

Grocery stores also made waves in 2015. German grocery giants Aldi and Lidl plan to open 2,000 new stores each from 2016 to 2018, a large expansion over three years. These lower-price chains may give American big-box grocery chains, and regional supermarkets, a run for their money once these stores open.

Online shopping for groceries also gained traction in 2015. Regional and local stores offer delivery services after customers fill a virtual shopping cart through a store's website. National chains have yet to perfect this delivery model as the speed of delivery remains the top concern for perishable items. Delivery of canned, nonperishable and nonfood items is simple enough through normal logistics companies. If national grocery chains, such as Wal-Mart and Aldi, can add a delivery service, regional supermarkets may face stiff competition.

Off-price stores continue to increase, as these lower-price stores increased 12 percent in 2015. Macy's, Nordstrom, Saks Fifth Avenue and Ross experimented with more off-price store openings, while TJX brands, such as T.J. Maxx and Marshalls, opened 213 stores in 2015 to expand their dominance of off-price retailers.

Consumers love new technology and new ways to shop, and this is particularly true of millennials. Younger consumers research products on the Internet before making a purchase, whether through online shopping or in brick-and-mortar stores. National retailers that sell a little bit of everything must learn how to get these shoppers into a store when new technology releases occur as a way to get people inside so they can purchase more than just the advertised item that's new in the store.

The trends toward online shopping may mean brick-and-mortar stores offer better delivery options from a warehouse, and this may essentially turn retail locations into fulfillment centers where people pick up their merchandise. Customers love real-time results thanks to shopping technology, so stores should adapt now to maintain market share.


Photo courtesy of stockimages at FreeDigitalPhotos.net

 

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