In overall, customer costs represent almost 70% of U.S. GDP and has actually been growing this year by 0.2% during May and June and 0.3% in July according to the United States Department of Commerce. Retail sales are likewise forecasted to increase at 4%; nevertheless, more general dollars are transitioning into online purchases. Throughout 2016, e-commerce saw a 15.1% boost from the prior year and amounted to $395 billion, representing 8.1% of all retail sales during the year.
E-commerce has continued to present an obstacle for the majority of merchants, as more clients are shifting a larger percentage of their purchases online. This industry interruption has actually been especially hard for clothes and electronic merchants. This year has actually seen substantial shop closings by large shopping center anchor stores such as Sears, JCPenney and Macy’s, which alone account for over 300 closures. Electronic retailers such as RadioShack and GameStop have actually also seen substantial closures, as have particular clothes merchants such as Payless, Gymboree and The Limited.
E-commerce has numerous advantages over traditional brick-and-mortar shops such as discount prices, alternatives and personalization, circulation networks, convenience, and cost savings by not keeping a physical store. Clients are also more most likely to price shop on sites. Prices can be particularly sensitive, as many sellers see very thin margins. There are also some considerable disadvantages such as shopping experience, the capability to physically attempt or touch a product before acquiring, product size and weight shipping hindrances, expensive returns, and hold-ups between ordering and receiving the product.
To fight e-commerce, brick-and-mortar stores have actually continued to focus on their own on-line presence while likewise enhancing their distribution networks and reducing expenses. Traditional retailers have actually ended up being more competitive on cost and can utilize the physical shop’s advantage by supplying numerous shipping options, consisting of offering very same day store pick-up, having actually an item delivered to a store, or having actually the product shipped directly to the customer. Standard merchants are also focusing on the improving the physical customer shopping experience. In addition, conventional retailers have welcomed better sites and phone applications. This can improve the merchant’s brand name image and the shopping experience. Many websites and apps can inform the customer if a product is in stock and even provide the specific location within the shop.
The future will likely force additional reductions in store presence, but physical stores will continue to be important routes for consumer spending. The current Amazon acquisition of Whole Foods reveals the significance of having a physical area near clients. To get more information about e-commerce or our Retail Services Group, contact us.