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Who Will Be Left Standing?

A recent report from Deloitte offers insights into the retail dying versus retail evolving argument. As highlighted in The Great Retail Bifurcation, retail is segmented into three types: Balanced retailers with traditional models blending price and promotion, Price-based retailers selling at the lowest possible price, and Premier-based retailers selling differentiated products in an experiential environment. Over the last five years each segment has experienced revenue growth of 2%, 37%, and 81% respectively.

What is also noted is that over the last two years, Price-based and Premier-based retailers have been expanding their store footprint while traditional Balanced retailers are faced with shuttering stores. While blame for the shift is convenient, only 9% of transactions occur online with projections to grow 1.7% versus 91% of transactions occurring in-store with projections to grow 11.7%.

So what gives?

Over the last ten years the asymmetrical shifts in income and increased costs of necessities have caused financial strains for roughly 80% of the population, leading to changing shopping habits and progressively shifting to buying on price.

Brick-and-mortar retail is not dying, but if the Balanced retail model fails to evolve to meet customer needs it may not be the one left standing.

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