Retail is something we are all familiar with, oftentimes part of our daily lives, yet there are many misconceptions about the industry. In the simplest terms, retail is a business model where a merchant sells goods directly to consumers through brick-and-mortar stores, marketplaces, or web stores to name a few. Retail occurs anywhere and everywhere: whether it is purchasing a digital printable graphic on Etsy or handmade candles at a holiday market, to a pair of headphones at a local electronics store or customized goods at a trade show.
Retail Is Thriving
There are an estimated 4.2 million retail establishments in the U.S., employing 32 million people. Retail sales grew by 7% in 2020 – increasing from $3.8 trillion to $4.06 trillion — and by over 14% in 2021. It is a sector driven by innovation, offering consumers numerous ways to shop and receive products. This includes physical stores, pop-up shops, direct mail, online marketplaces, social media and a growing variety of fulfillment models that allow shoppers to choose how their order is received (e.g. in-store pickup or home delivery).
Online Sales Channels Are Not Killing Brick-and-Mortar Stores
With the popularity of online shopping, media reports have suggested that a “retail apocalypse” is at hand, creating a perception that small businesses are being driven out of the market by large, big box retailers or online marketplaces. Adding to the confusion is the fact that some lawmakers and regulators in Washington have echoed this false rhetoric and have proposed legislation that, among other things, would prohibit companies above a certain size from common retail practices such as promoting their own products and services within their stores.
Here’s the truth: 80% of shopping still happens in person. Physical stores continue to play an important role in the retail experience. Rather than being a detriment, online sales channels are lowering barriers to entry and actually helping the industry grow by offering small to medium-sized businesses more ways to reach consumers with fewer upfront costs.
Small Businesses Are Booming
In 2021, U.S. retailers announced twice as many physical store openings as closings and retail was also a top industry driving small business creation. Over the past five years, small business retailers have seen an average revenue growth of 51%. In fact, most retail sales in the U.S. occur outside the largest retailers.
What makes retail especially attractive to small business owners is that there are currently numerous ways to launch a store and reach consumers. In addition to the traditional storefront, sellers can easily break into online marketplaces, sell directly from their own website or on social media. Fulfillment services aimed at supporting online sellers and user-friendly digital marketing tools have empowered entrepreneurs like never before. Marketplaces such as Amazon, eBay, and Etsy offer small businesses access to millions of customers. What’s more, the vast array of viable online sales methods helps small and medium-sized businesses pick the methods that serve them best. It also allows them to better meet consumers’ desires for choice and convenience, as 68% of shoppers prefer retailers that offer both in-person and online shopping.
Omnichannel Is the Future of Retail
Consumers expect to be able to shop when they want and how they want. Retailers are offering a variety of ways to shop, mixing both online and offline sales methods and product fulfillment options – commonly known as omnichannel retail. An omnichannel shopping experience allows consumers to shop in-store, online, over social media and many other channels. Today, the average small and medium-sized retailers use five sales methods, mixing offline and online channels; highlighting how online channels are promoting competition, not hindering it.
It’s time to correct the misunderstandings about the retail industry that have been perpetuated by misleading reports and by political rhetoric calling for increased regulatory measures. The reality is that retail is a dynamic, robust sector presenting significant opportunities for businesses of all sizes. And as consumer preferences change, retailers need to continue to adapt by offering shoppers innovative ways to purchase and receive products if they want to stay ahead.
You can find the above explainer linked here.