Brick and Mortar Stores Continue to Suffer

More good news to go along with June jobs report, June retail sales went up 0.6% in June. Although May sales were revised down to only a 0.2% increase. In essence May was a terrible month and June was an awesome month. Combine the two and we get two average months. The reports could always be worse than average. But this article isn’t just about sales increasing again or another rant about wanting these numbers to be separated by what was spent by credit versus cash. Instead I want to look at the continued decline of brick and mortar sales.

A recent Morningstar article pointed out that sales at brick and mortar stores have declined by 3.8% this year so far while sales outside of this traditional realm have increased by 10.6%. This has been a continuing trend for years now. The question is, is this shift a bad thing?

I wouldn’t necessarily consider it a bad thing because jobs will still exist but they will be different. The jobs of dealing with customers face to face will be replaced by jobs in warehouses packing the items into boxes and then to the companies who have to deliver these packages. I’ve not seen a study showing whether the shift will decrease or increase the amount of jobs available. I think it would be an interesting study to look into that as well as the wage difference between retail jobs and the jobs needed to get an item to your door after ordering it online.

It is also important to remember that in some ways consumers have had no choice in the matter. For example I have to get my medications through the mail or pay a hefty premium to get them from my local brick and mortar pharmacy. I would prefer to go to my local pharmacy but I’m penalized for doing so

I personally enjoy shopping in actual stores; except for November and December. The crowds at that time are too much for me to handle. The other issue is online retailers have provided a better value proposition than brick and mortars have. For example, I will order groceries (non-perishable stuff) online often. The reason being is these stores will run discounts such as ten or twenty percent off your entire order. In all honesty the prices normally aren’t that different from the brick and mortars except when these sales occur. My problem is I can’t recall the last time Kroger or Walmart had a 10% off your entire grocery purchase sale. The game has changed and brick and mortar stores are struggling to change along with it.

Some have made great strides though in changing to the current market conditions. Best Buy for example will match the price of several online retailers. I personally have bought items there that were cheaper at Amazon and they’ve happily matched the price. Other retailers like Walgreens are fighting this change tooth and nail. I once went into a Walgreens store and found the product I was looking for but it was cheaper on their website than it was in store. The cashier initially refused to sell me the item for the price listed on their own website. The part that matters to me the most was the difference wasn’t small; it was 45% more expensive in store than on their own website. Eventually the manger matched the price but told me to never ask for a discount like that again. I was told if I found an item cheaper on their website than in their store, order it online next time. My biggest complaint with this experience was the price I wanted them to match was from their own website. I wasn’t asking them to match the price from another retailer.

The retail landscape is changing and some stores will adapt to the shift while other won’t. The stores that refuse to change will eventually become a shell of what they once were or simply die out completely. For better or worse.

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