The Sustainable Revolution of Physical Retail Stores
Physical retail stores will have to evolve, adapt if they are to survive. They will need a total transformation from the status quo.
E-commerce has emerged the inevitable killer of physical retail stores. Online shopping is now among the most prevalent features of modern life, with the trust built in peer-reviews and ratings helping to eliminate the most important factor of the sales process; doubt.
Every time I’ve visited a shopping mall or high street store in the past decade, I’ve been overwhelmed by the quantity of junk on display. I wander through the aisles and it can take hours to find something of interest. Granted, I am distant from the typical consumer mentality, yet I still like to treat myself or spend that bit of extra cash.
Now experienced in manufacturing in Asia and dealing with buyers for retail stores, it’s clear the huge markups that retailers apply, but less obvious as to why they have to add such a margin. They have rental costs, staff, storage, marketing teams, the full package of overheads and bills to pay, not to mention the shipping costs of getting products to them.
With massively saturated markets there’s ever greater expense on professional design and marketing strategies to convince you that “this product is better than the competition”. All of these costs are inevitably passed on to the customer. The result is a markup that starts from around 8x the cost from the supplier, and heads quite easily into drastically higher margins.
In the struggle to compete with online shopping, retailers are acting desperate. Product choices are becoming more predominantly based on their markup potential, than consumer demand. The age-old “buy low, sell high” principle has been stretched beyond reason. The consumer is left without feeling they’re getting their money’s worth, their value, because they’re not.
We see summer sales, winter sales, spring sales, breakfast sales, Tuesday afternoon sales, ‘Wendy fell over last week, I think she might need to have her hip checked’ sales, any excuse to provide an illusory shift in perceived value. Half the store has been on sale for as long as we can remember.
But as the mega retailers are busy duping the consumers, they’re also trying to dupe the manufacturers as they aim to shift the onus of their newfound battle. Markets are driven down, and every manufacturer is expected to compete on the lowest possible price point.
Quantity is king, and manufacturers are expected to drop the bulk of their profit margin for the (suggested) security of large orders.
We all hear of the tragic conditions of exploitation and sweatshops, but little of the much larger quantity of struggling factories now being forced to compete on the prices that have been set by modern day slavery and environmental destruction.
The result of all this… a distinctive lack in happiness throughout every part of the chain.
- Those who buy such products don’t feel they’re getting value.
- Those who make the products are just getting by with little sense of opportunity for personal growth.
- Those who sell the products feel they’re still struggling to compete with E-commerce alternatives.
So how can this circle of mess be a good thing?
The word “unsustainable” provides the description and the answer. It is not sustainable, it cannot be sustained, it will not last, it will come to an end. What comes after that end could be exciting, and personally, I think we’re already starting to see it.
The empty remains of high street shops won’t stay boarded up, and vacant forever as their landlords wait for someone to pay 100 times the rental price it was 20 years ago. The shopping malls aren’t going anywhere. This isn’t an end to physical shopping, it’s the start of a revolution in physical shopping.
Shops are going to have to start providing things that people actually want, things that actually work, things that are beautiful, creative, have a story behind them, have a message, have an identity, a culture, a meaning, a purpose.
Through the decline of large retail outlets there has been a boom in boutique stores popping up all over the planet. A new age of coffee shops, hipsters, and the word ‘artisanal’ keep cropping up in the most unlikely places. Even thrift stores are becoming ‘cool’ to those who would have once considered themselves above the idea of second hand.
When retailers come to the realization that selling the illusion of value no longer works, they will be forced to buy products that actually have value. Supply and Demand.
Retail stores are going to have to pride themselves on what they offer to stand a chance. You can’t pride yourself on gimmicks, sweatshop labor and a product line that looks like the inheritance assets of Aunty Hoarder.
They’re going to need retail staff that are actually interested in what they sell, rather than looking like they’d rather not have got out of bed for the past year.
They will have to maximize the use of the only thing they have left to their advantage, a physical presence, a social experience, interaction that is actually engaging.
Physical stores are going to need sustainable and ethically made products. They are now selling to a generation that has been privileged with abundant resource of information that allows them to see through the naivety and the inevitable failures of excessive capitalism.
All the brightly colored discount signs, the dollar bins, the “you’re not cool unless you have this” marketing ploys, have long become tired, redundant. The access to free education on marketing techniques has lead to a saturation of their usage, and a rise in their ineffectiveness.
Conditioned consumerism will fall, because anything that consistently fails to satisfy its audience holds a ticking clock to its decay.
When an audience feels a website is providing a better shopping experience than a retailer, there is a problem. If sitting at a computer or a mobile phone, is better than visiting a store with friends and family, and experiencing a product with of all the senses, there is a problem. To singularize that problem as “people like convenience” is to underestimate human motivation.
We’ve witnessed ourselves a massive growth in businesses selling ethically made eco-products opening stores, adding stores, growing, at a time where retail giants are closing down. They don’t need million-dollar marketing campaigns to sell their products.
This is the beginning of a wonderful end. In time, we will see high streets and shopping malls filled with passion, creativity, uniqueness, arts, culture. They must become places that can honestly celebrate what they provide. Places that contribute to societies rather than strip them. In an information age where brands can be named and shamed for exploitative behaviors instantly, the norm will change.
The lessons of being unable to adapt to a change in market demand are easy to find. Blockbuster, Toys R Us, Compaq, AOL, some of the multi-billion-dollar companies and household names, that have disappeared completely through failure to adapt in the past decade. The next will bring far more challenges to ‘business-as-usual’ than ever before, as evolution paves way for revolution.
There is the tiny voice of a pessimist inside me that says, “Maybe there’s not enough people who care. Maybe business will carry on as usual, exploitation will continue, high street stores in general will keep selling over-priced rubbish”.
But fortunately, there is so much indication to the contrary, you just have to look at the big guns who spend fortunes on international market research.
When companies like McDonalds, Starbucks, Nike, are aiming to present themselves as supporting the environment or introducing sustainable practices, it is not because their audience doesn’t care about it.
I’d predict their typical audiences, are likely at the incredibly early stages of learning about sustainable practices, and they still care. I won’t explain how I came to this assumption for fear of a libel lawsuit, but I hope you might catch my drift!
If someone had come into the board room of a mega-corporation 20 years ago suggesting a rebrand centered around being green, sustainable, or ethical, they’d have been laughed out of the meeting. Now, there’s the data to back this up and this exact scenario is playing out daily.
Consumers care more now than ever before about where their products came from and what impact they have, and this is an upwards curve with no sign of stopping.
Accenture Study - “The survey of 6,000 consumers in 11 countries across North America, Europe and Asia, found that while consumers remain primarily focused on quality and price, 83% believe it’s important or extremely important for companies to design products that are meant to be reused or recycled. Nearly three-quarters (72%) of respondents said they’re currently buying more environmentally friendly products than they were five years ago, and 81% said they expect to buy more over the next five years.”
Toluna Study - “For consumers aged 18-34, 45% indicated that it is extremely important to purchase goods that are produced in an environmentally friendly way. However, only 14% of respondents aged 55-and-over indicated the same, with 45% of that same demographic indicating that they would pay up to 5% more for environmentally friendly goods.”
This presents a staggering difference in perspective between the youth and the elders when it comes to purchasing decisions related to the environment.
If we are to look to the future of consumers, of industry, of physical retail, it is the youth now who decide the product demand. They will declare what’s worth putting on the shelf in a retail store. They know what they’re doing, and they know how to cast their money vote.
Any retailer and brand name that doesn’t want to be the next Blockbusters, best prepare themselves:
Not with empty greenwashing promises. Not with ‘recyclable’ straws that can’t be recycled (McDonalds).
Not by sticking a “sustainably sourced” label on chocolate products while your cocoa purchasing still supports child and slave labor (Nestle).
To present yourself in a future to an informed generation, you’ll need to be true your word and walk the talk to survive.
Those in their teenage years now, are among the first to hold the internet in their pocket. It is a scale of access to information almost infinitely greater than ever before. There is no longer a barrier in class or wealth for access to education.
With each decade we see an exponential increase in the capabilities and access to information and technology. One of the key results of this has been a continuous momentum building towards greener, ethically made products. The next decade will continue to make record breaking speed and amplify our awareness of the need to protect and support our world and the people in it.
Following a year now of stagnancy and fear, this brings me hope. Perhaps this has been time for many to reflect, to develop our integral moral values, and to learn a bit about what goes on beyond our regular borders of attention. What we will demand moving forward, will change.
I hope my predictions prove to be true, and I hope we can all take pride and reward in being a part of this movement!