It is well-known that brick-and-mortar stores have struggled in 2017. J.C. Penney and Macy’s, iconic brands, have announced store closings in 2017, while other mall-based retailers like American Apparel, Wet Seal and The Limited have also closed their doors. Why? One reason is […]
It is well-known that brick-and-mortar stores have struggled in 2017. J.C. Penney and Macy’s, iconic brands, have announced store closings in 2017, while other mall-based retailers like American Apparel, Wet Seal and The Limited have also closed their doors. Why? One reason is that there’s less in-store traffic. This is due to more people shopping online. When you think of e-commerce, most people think Amazon.com.
Total Retail conducted a survey of its audience to find out their brick-and mortar sales in the past year. The results were divided by B-to–C, B–to–B, and hybrid retailers (both B–to–C and B–to–B). These results were presented in the Total retail report and IBM report The Amazon Effect. How retailers are adapting their businesses to better compete with the industry leader. Particularly, the Amazon growth seems to have had the greatest impact on brick-and mortar sales for B-to-C retailers. The chart below shows the results.
Retail store sales decreased by at least 5 percent for 18% of respondents from B-to-C over the past two year. In the same period, another 13 percent of B to C retailers saw their sales drop by 1 percent or more. In contrast to the threat of Amazon shoppers buying online, brick-and-mortar sales for B-toB retailers have increased. These respondents reported that 21 percent of their sales had increased by 5 percent or more in the past two years. For 18% of B-toB retailers, sales increased 1 to 5 percent.
Alibaba opens its first brick-and-mortar mall
Alibaba, China’s largest online seller, is building a mall to enhance the shopping experience. The company’s five-story shopping mall, which it calls “More Mall”, is located in Hangzhou, an eastern Chinese city. Linkshop.com reports that the mall will open in April on a plot of land measuring 40,000 square meters. Construction crews are currently finishing up the interior of the building.
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Total Retail Take: Alibaba is expanding its reach in the offline market much like Amazon.com, the dominant ecommerce site in the U.S. Alibaba wants to capture the remaining 85 percent. E-commerce is responsible for approximately 15 percent of China’s total retail sales. This is a higher percentage than the U.S. Alibaba plans to integrate technology into its in-store shopping experience. This includes virtual fitting rooms, mobile payments solutions and high-tech make-up-testing mirrors. Although they serve a different customer base (at least their primary customers), Amazon and Alibaba are united in one thing: brick-and mortar is the future of retail.