News reports often warn of the decline of brick-and-mortar stores amid the growth of online retail options, frequently referred to as a “retail apocalypse.” The truth is that brick-and-mortar retailers, regardless of size, are investing and integrating online sales methods to connect with and serve customers both online and offline.
Here are the top four myths of the “retail apocalypse”:
Myth 1: A few large retailers dominate retail.
Truth: For every dollar consumers spend, 75 cents go to retailers outside of the five largest retailers. Most businesses in the U.S. – 99.9%, to be exact – are small businesses, and small business creation has exploded. Over the past five years, small business retailers have seen an average revenue growth of 51 percent.
What’s more, some lawmakers in Washington have helped flame the fires of this myth, wrongly claiming large retailers like Amazon dominate the retail market. In reality, physical retail continues to account for 80% of total retail sales.
Myth 2: Since COVID, most consumers now shop online.
Truth: While there was a brief period early in the pandemic when Americans preferred to shop online for many of their essentials, data show this isn’t the case anymore. Online sales account for less than 15% of all retail sales. However, shoppers will continue to expect retailers to offer a mix of both online and offline channels to conduct research, compare prices, and select the fulfillment option that is most convenient for each purchase.
Many brick-and-mortar stores are relying on both their physical location and online channels to serve customers and fulfill orders. For example, 61% of small and medium-sized businesses (SMBs) offer buy online, pick up in-store (BOPIS), and 50% offer same-day curbside pickup for online purchases.
Myth 3: Small retailers have no choice but to use the Amazon marketplace if they want to sell online.
Truth: The truth is that the average small and mid-sized seller uses five sales methods, mixing both online and offline channels. In fact, 83% of SMB sellers in Amazon’s store use an average of five or more sales channels, and 87% use at least one other online marketplace.
Customers have come to expect the vast offerings supplied by SMB marketplaces, which is why retailers are heavily investing in SMB success. Large retailers offering marketplaces such as Walmart, Amazon, eBay, and Etsy are empowering small businesses to reach customers far and wide and reduce sellers’ inventory and warehousing costs. Amazon spent more than $18 billion in 2020 on learning tools for SMB sellers, like Amazon Small Business Academy. And it’s working – in 2021, U.S. sellers in Amazon’s store averaged more than $200,000 in sales. The average eBay seller earns about $35,000 per year, and eBay has committed $500,000 in funding and mentoring resources to support small business sellers via its Up & Running Grants program.
Myth 4: Consumers and small businesses want the government to impose more regulations on retailers of a certain size.
Truth: American consumers resoundingly agree that the current retail space offers them the choice and convenience they want; 80% of consumers believe retailers, regardless of size, should be treated equally.
Small businesses are worried that invasive government policies will hurt their sales. According to a recent SBEC survey of small businesses established during the last two years, most are concerned that government targeting of large online marketplaces will cause small businesses to lose access to free and valued services and increase the cost of accessing and retaining customers.
What do small businesses really want the government to focus on? Inflation and access to capital – the real threats to their livelihoods.
THE BOTTOM LINE:
One way of doing business has not pushed out another but rather created more options and more competition. Retail has proven to be able to innovate through new business models, products, and services that benefit consumers – both online and in stores.
If you’d like to learn more, review our one-pager here.