The headlines have become repetitive: stores closing across the country as retailers go bankrupt, or struggle to avoid it, shuttering physical outlets in favor of pursuing our dollars on digital channels.
Retailers have long accepted that not all stores make money. Most rely on their most profitable stores to fill in the gaps by those that only break-even. And those that break-even usually lose money if you look at the corporate as opposed to the local P&L. In years past, the goal of brand penetration justified maintaining stores in lower-performing markets, but this model becomes less feasible as changing customer behavior causes sales, even at the busiest stores, to decline.
Other journalists have documented this trend more effectively than I could hope to, including most recently Michael Corkery in the NY Times. What gets missed however, in the coverage of retail employees out of work and plummeting stock prices, are the communities who rely on physical, local stores.
Statistics show that about 70–80% of Americans shop on the internet. That’s a majority, but still leaves at least 20% unaccounted for including the 13% of Americans who still have no internet access and those who do not have the credit needed for online shopping. Additionally, if you have no address or no permanent residence, you can’t very well rely on delivery.
Emerging payment models that allow the simple tap of a phone or swipe of a watch assume that the user not only has credit, but has secure enough credit to make purchases almost thoughtlessly. As the producer of a retail summit series I have learned the expensive way how easy it is to go from browsing to buying once your browser has your credit card information stored at the ready. Although these payment methods increase convenience, for those who do not have access to credit or only to very limited credit limits they are often unavailable or high-risk.
Under-served communities might not mark the bankruptcy of BCBG Max Azaria, but, when Walmart starts closing stores, some towns simultaneously lose their grocer, pharmacy, primary employer and community gathering space. Once upon a time the arrival of a Walmart decimated downtowns with deep discounts, but now in their absence remote areas look to a different, and much needed, brand of retailer. Two retailers — 99 Cents Only Stores and Family Dollar — have both developed a robust online presence (check out the 99 Cents Only Stores’ Instagram) without investing in E-Commerce. All sales happen in store and these stores often exist in under-served areas that would otherwise be food deserts. These less flashy brands driven not by trends in tech, but by selection, savings and accessibility are actually opening new stores to meet the demand of cash in hand, price-conscious customers.
Retail’s digital transformation has in many ways empowered consumers by increasing competition and allowing for increasingly seamless transactions. As with any economic or cultural shift however, the impact radius leaves some on the outside looking not to their screens, but to local stores to meet their basic needs.