2016 was a banner year for online retailers, both for standard internet traffic and mobile (quickly becoming standard) traffic. In fact, even before Black Friday, with some estimates placing online sales at about 40% of all retail sales. Others place it as low as 15% (the confusion is a combination of poor metrics, obfuscation, and outright lies), but almost all analysts now agree: by 2030, more than 50% of retail sales (excluding Bar and in-Restaurant sales) will happen online.

The numbers from Black Friday 2016 are a portent for things to come:

• Nearly $92 billion (up a 11%) sold online;

• Almost 26 billion visits to online retail sites;

• More than 50% of online sales and website visits came from a mobile device (generating nearly $30 billion in revenue);

• Amazon managed to get nearly 40% of every retail dollar spent in November.

More than it being an awesome year for eCommerce, but it was a particular bad one for brick-and-mortar stores. While Amazon is adding about 100,000 jobs, brick and mortar layoffs and closures stand in stark comparison:

• Walmart is (potentially) laying off about 1000 jobs at their headquarters;

• Macy’s is really taking a deep cut, losing nearly 10,000 jobs;

• Sears sold their Premiere brand (Craftsmen) – and is closing a whopping 150 Sears & KMart locations. It is likely that this is only the first round of closures;

• The popular clothing company Limited closed all of its stores (250) and filed for Chapter 11;

All of these massive Retail corporation closures are having an even harder impact on local stores. Macys, JCPenney, Sears, and even Limited are all staples of the American Mall (often called Anchors). As the larger chains fall, the smaller stores in malls suffer even harder. The problem is threefold:

1. Malls can’t find another retailer who can rent a massive space left behind by a Sears;

2. Anchor stores provide the largest chunk of a Mall’s revenue; most aren’t profitable without it;

3. Again, Anchor stores are often the reason people go to a mall. So without the JCPennys of the world, Malls also lose foot traffic, which depresses revenue for the other stores, causing more closures, etc.

Industry Analyst RetailNext reported that not only did mall sales drop 10% in 2016, foot traffic fell an additional 13%. All across the US, malls are closing up and disappearing from the American imagination and changing the face of retail. So what does this mean for the traditional brick and mortar stores? Well, to put it bluntly: Evolve or die.

How to Evolve into a Mobile Retail Giant

Walmart, while cutting jobs, is also really pushing big into the world eCommerce. Just recently, they bought eCommerce upstart Jet.com for a cool $3 billion. Their intention is to integrate this highly successful online retail store into Walmart’s existing ecosystem. This isn’t a new trick (Microsoft was well known for just snatching up potential rivals left and right) but it does point to a way forward for traditional retailers.

Walmart did more than just buy a website. They bought an algorithm and an entire eCommerce infrastructure. They can leave Jet.com untouched and create a Walmart branded online store using Jet.com’s proven algorithm.

More than that, while these massive brick and mortar retailers are reporting store closures, they’re simultaneously reporting gains from their online outlets. So key takeaway# 1 for brick and mortar stores is that you if you would like to continue to be viable, you must have a way for your customers to buy from you online.

An eCommerce site is a great example of this – but you probably already know that. This is probably not the first time you’ve read a piece about the dire necessity of a website. The usefulness of modern tech does not end at website.

Any business generates data, but online tools like a Customer Relationship Management (CRM) System allow you to collect all of that data. When combined with Google Analytics. These tools enable ways to discover new relationships and further develop existing relationships. This data can even tell you who is local or interested in visiting your physical location, which can lead to improved marketing campaigns. So key takeaway #2: Big Data analytics can revolutionize how you conduct business.

Social media sites are not only great resources to study the competition, but are also an unparalleled tool for discovering more about potential customers. The true jewel for a retailer though is the ability to reach a global market – a potential consumer pool that cannot be reached via a brick and mortar store.

Furthermore, most of the giant Social media sites like Facebook are pushing hard to improve their platform’s potential to help retailers, both traditional and online. The prime example of this are ChatBots (aka MicroApps, aka Bots); these tools are inexpensive, effective, and represent the future of online sales, especially for impulse buys. In other words: key takeaway #3, Social Media can growth hack your business – and is necessary to the success of a modern business.

So to wrap this all up, the need for brick and mortar stores is decreasing and US Americans are changing their shopping habits. However, traditional retailers will never go away entirely; there are clear ways for traditional stores to improve their revenue using the tools of technology (beyond just building a simple website):

1. The Obvious: building an eCommerce site (or even better, an app);

2. The Data: there’s no denying the unrivaled resource in customer management represented by Big Data; and

3. The Opportunity: Social media is an amazing tool for research AND market growth.

The only other piece of advice we would like to impart before we depart: we are seeing the rise of mobile, as indicated earlier. So, no matter what you do, you need make sure your website (which you should have) functions perfectly across all devices, especially mobile devices.

The good news for the business owner and/or entrepreneur is that SDI does all of this and more. Whether you need to go mobile, build better tools for Big Data, or start your own online retail business, we can help! Give us a call at 408.805.0495/408.621.8481 – or click to contact us!