Is Retail Dead?

In view of a brick-and-mortar apocalypse, physical retail spaces enter “survival mode.”

Key Takeaways

  1. For new-generation customers, the instant gratification and convenience provided by e-commerce platforms are just too comfortable when compared to a brick-and-mortar paradigm.
  2. In the last ten years, we’ve seen the perception of retail being shifted from a space of exclusive spending experiences to a medium for aesthetic storytelling.
  3. While economically more stable giants will have greater resources to invest in online marketing, smaller brands can still turn to leverage their local communities to establish strong bonds.

Catastrophic predictions about the end of traditional retail have always been in vogue within the industry. Although the hyper-accelerated pace of fashion allows it to kill and give birth to its own establishments faster than any other mode of cultural production, this chant of death is more valid than ever in 2021.

According to Forrester Analytics, the data still seems to be looking optimistic; in 2020, more than 70% of fashion sales were done offline, while online accounted only for 13% of luxury purchases. Yet, the physical retailer perceived as the ultimate touchpoint for the aspiring customer of the past is swiftly losing blood. With the increase of the chunk of spending from millennial and Gen Z customers, which are driving the digital transformation in the fashion system, the conversion into sales is no longer limited by the dimensions of a storefront. The instant gratification and convenience provided by e-commerce platforms are just too comfortable when compared to a brick-and-mortar paradigm.

As photographer and artist Sze Tsung Leong expressed in Rem Koolhaas’ Harvard School of Design Guide to Shopping, "Not only is shopping melting into everything, but everything is melting into shopping"—just, not in the way that retailers were expecting. In the last ten years, we’ve seen the perception of retail being shifted from a space of exclusive spending experiences to a medium for aesthetic storytelling.

This ever-changing surface underwent an ever more radical transformation with the outbreak of the virus in late 2019 due to lockdown-imposed closures of all non-essential outlets. It was a retail apocalypse, and no segment was left untouched. Neiman Marcus was one of the first luxury department stores to file for bankruptcy, which was followed by similar news from the side of the specialty store Jeffrey.

The situation looked rocky also from the brand’s perspective, as independents such as Sies Marjan announced seizing operations due to the economic impact of the pandemic. The shift of investment from retail to e-commerce was no longer just advisable, but imperative to stay afloat in a sea of uncertainty—especially for medium-sized, independent brands and retailers without safety nets that were already functioning on “survival mode”.

If retailers had problems with keeping up with the current digital transformation, now they also have to face timing issues in becoming relevant as well. The backbones of the trend cycle, fashion weeks, have also been moving towards more innovative e-commerce partnerships, as experienced during Shanghai’s AW21 Fashion Week. Shows were broadcasted live on Tmall, the B2C website owned by Alibaba, where viewers could also simultaneously buy a selection of the items from the runway on a see-now-buy-now basis, and pre-order others from the collection via their smartphones.

In the current fashion cycle, an average retailer would need around six months from the moment of the fashion show until the launch in-store— a more than adequate time for a digital partner to satisfy the existing customer demand leaving no further commercial space. While there is great uncertainty surrounding the whole retail sphere, there still is a spark of hope as many people still want to touch fashion items before they buy; now it’s the time to benefit from human needs.

While economically more stable giants will have greater resources to invest in online marketing, smaller brands can still turn to leverage their local communities to establish strong bonds. The idea of culturally positioning a brand through the retail context is likely to become less important for bigger conglomerates due to the minimal and local return on invested capital. Yet, for brands operating on a more niche scale, it will be key to leverage loyal communities. We’ll witness more independents turning their existing mono-brand spaces into cultural hubs of contact (either IRL or online) focused on exploration and connectivity until a certain point of growth, as this would yield a more immediate response on the product.

In a world where no one is getting it quite right, we still might find a way to make the changing-room-mirror selfie happen. At least, for the time being until the VR room selfie takes over.