Amazon is eating up the retail world but cafes and restaurants are filling the void.
Stores Closing Down:
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The rash of retail store closings continues. Fourteen chains have over the past three months announced they’ll seek bankruptcy protection, a record rate, according to Bloomberg. Payless Shoesource is the latest, joining the likes of Radio Shack, BCBG and The Limited in spiralling toward oblivion.
Amazon and internet shopping in general are the obvious causes. It is incredibly tough, after all, for bricks-and-mortar retailers to compete against the lower prices and virtually limitless selection that can be found online.
It’s important to note this trend isn’t happening in a vacuum. Amazon’s growing domination isn’t as all-encompassing and frightening as the store closings might make it seem, nor is it a harbinger of a retail-less apocalypse. It may in fact be a good trend when several side effects are considered.
Though we don’t hear about it as much, the opposite is also happening – plenty of new stores, and new chains, are opening up and expanding. In many cases, these new retailers originated as strictly online operations. Their advantage over the old guard is customer data – they have lots of it and they know how to use it.
The poster boy for this trend is Montreal’s Frank + Oak. The men’s retailer started as an e-commerce concern in 2012 and is already up to 14 stores in Canada and the United States.
But rather than just operating “dumb” retail outlets, staff in the stores are armed with information about the customers they serve, including their sizes and style preferences. Customers can make personalized shopping appointments on their phones.
Frank + Oak is by no means the only online retailer that has gone bricks and mortar. So have women’s clothing retailers Boston Proper and Rent the Runway, British jeweller Astley Clark and high-end cycle wear e-tailer Rapha, to name just a few. And, of course, even Amazon is opening stores.
Another trend, especially in Canada, is the move toward mass market high-end retailing. Executives at mall-owning companies point out that luxury goods are considerably more resistant to online shopping. People seem to like spending large amounts of money in person.
Malls in Canada are going upscale as a result. Anecdotally, it’s a strategy that appears to be working. While many U.S. malls can resemble ghost towns, it’s often hard to even find a parking spot at their Canadian counterparts.
One other trend that works into all this revolves around what’s filling all those closed-down stores: restaurants and cafes.
It’s boom times for these particular businesses, with the international restaurant industry growing 5.7 per cent in 2016, according to Euromonitor International. Cafes are especially hot, seeing 9.1 per cent growth. And it’s happening everywhere, from North America to Asia.
Put it all together and it suggests a good economic indicator. People shopping at high-end malls and frequenting more restaurants indicates that they’ve got the disposable income to do so. That’s a different story than the store closures tell on their own.