If you ask most people operating in the real estate market, they tell you that retail is at risk. The latest data shows commercial real estate retail deals are slumping, because Amazon is fundamentally changing the retail industry and pushing people online.
The facts, however, are decidedly different, as Black Friday, Small Business Saturday, Super Sunday, and now Cyber Monday reveal.
Over the weekend, Adobe released its findings on U.S. retail spending over the past few days. It showed a clear consumer desire for online shopping (Black Friday online sales reached a record $7.4 billion, for instance). The study also found that mobile purchases accounted for 39 percent of all e-commerce sales–a 21 percent jump compared with last year.
At first blush, that might seem like brick-and-mortar retailers suffered. In truth, they benefited from an increasingly important phenomenon in which people buy online but pick up their orders in stores.
According to Adobe’s data, so-called BOPIS (Buy Online, Pickup In Store) purchases were up a whopping 43.2 percent year over year. It was a clear “sign that retailers are successfully bridging online and offline retail operations,” Adobe said.
In other words, brick-and-mortar retailers have found a way to bolster their offline businesses. Target and Best Buy have been among the most successful at it. During its fiscal third quarter ended November 2, for instance, Best Buy reported revenue of $9.8 billion, beating Wall Street’s expectations. Its growth came from a mix of online and offline sales.
But perhaps nowhere is the evidence of Amazon not killing brick-and-mortar stronger than in a quick evaluation of Amazon itself.
While the company still generates the lion’s share of its retail business online, it’s increasingly focusing its efforts in brick-and-mortar.
In 2017, Amazon announced plans to buy Whole Foods for $13.4 billion. Now, two years later, Amazon is only expanding its investment in the company and ramping up its delivery options to make it a more attractive option for shoppers.
Meanwhile, ?the company’s cashierless stores, Amazon Go,are growing in number and size. Amazon is placing more of them across the U.S., with plans to dramatically expand their footprint over the next few years. The company is also planning to open bigger Amazon Go stores that could be the size of supermarkets.
Perhaps most important to competing retailers, Amazon has also signaled a willingness to license its cashierless technology to competitors.
All of that should be making retailers ask themselves a very important question: If Amazon is the company that’s destroying brick-and-mortar retail, why is it also the company moving so aggressively toward it?
The fact is, brick-and-mortar retail still offers plenty of value to consumers, especially in food products, grocery stores, and convenience and service locations that can’t be easily replaced by Amazon. Even in areas where Amazon could replace the retailer (think electronics), companies like Best Buy and Walmart, among others, are doing well.
There’s no debating the future of shopping will still be dominated by e-commerce, but predicting the demise of offline shopping is ludicrous. And judging by its latest moves, no one knows that better than Amazon.
PUBLISHED ON: DEC 2, 2019