Growing up going to a mall or a retail store was an exciting outing, but times have changed since then. The days of going to a store seem numbered and few. Technology has changed and people have changed. Since the onset of the Internet and e-commerce, people’s tastes have evolved with the times. With this change, multiple companies have declared bankruptcy over the last few years. High-end companies and low-end companies have fallen victim to this, but just why exactly is this happening?
1) Why stores are closing:
When going to your local mall or shopping center, I am sure you have noticed many “going out of business” or “store closing” signs. This is not a new occurrence by any means, but it has become more frequent. Why is this the case? Well, one reason for this is increased rents. Stores can’t keep up with the demand from the retail space they rent from and this ultimately causes their downfall. A recent example of this was just last month when Barney’s declared bankruptcy. Their rent was rapidly increasing and they could not compensate. At their Flagship store in Madison Avenue in New York City, their rent skyrocketed from $16 million to $30 million a month.
Another reason for this is decreased traffic in the stores. Less and less people are going out to a physical store and this shows in their sales. A recent example of this is Forever 21 declaring bankruptcy happening just yesterday. They somehow lost their way and have not been keeping up with the needs and wants of their target customer. This was not an overnight occurrence; this has been happening for years. If you are not in tune with your target costumer, you will ultimately lose market share and it will cause your business to go down.
Forever 21 is a fast-fashion retailer that has multiple competitors. Their competitors like H&M and Zara have kept up with their customer’s demands and are prospering because of this. Forever 21 are set to close over 350 stores worldwide and as many as 178 US stores. This is the current reality of the fashion industry and more brands will succumb to this if they do not adapt with the times.
2) Online Shopping Has Taken Over:
The first e-commerce transaction was in 1994 and Ebay and Amazon launched in 1995. Just like with any new technology, at the time of its inception people did not know what to make of e-commerce and some companies did not take them as serious competition. Since then, Amazon has evolved but other retail companies have been set in their ways. This is why Amazon is thriving and many other companies are declaring bankruptcy. Amazon works with extremely large data sets that can be analyzed computationally to reveal patterns, trends, and associations, especially relating to human behavior and interactions. Amazon uses technology to their advantage and keeps up with what their target customer’s wants and needs. According to Bernard Marr and Co, “Big Data works on the principle that the more you know about anything or any situation, the more reliably you can gain new insights and make predictions about what will happen in the future.” E-commerce is the way of the future and is conquering retail stores.
Personally, most of my shopping I conduct is online. It is easier to order merchandise from the comfort of my own home and try it on. I live by one of the largest malls in the country, but hardly go there anymore unless I really have to. Just the other day I ordered clothes from Banana Republic online. It takes a lot of time and effort to go to a physical store and shopping online saves me a lot of time.
Online shopping has evolved into a big conglomerate through the years and retail stores are finally catching up. Overall, keep up with your target customer to keep your business profitable and thriving. Learn from these larger companies to know what to do for your own business model. Small companies can still think big and grow. Amazon started off as a small company in the 1990’s and look where they are now. Just have the tenacity and drive and make it happen. Keep this in mind when designing for your target customer so your brand can stay relevant and not sink into obscurity.
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14 Essential Truths Everyone in the Fashion Business Should Know
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