It seems, with some years of delay, little by little but without pause, some of the prophecies that were made with the emergence of Internet in the dotcom bubble are fulfilled. Finally you can buy online, not just a cheap digital gadget at Amazon but a whole and comfortable wood house (look at www.loghouse.ie), and you get it quickly delivered to your door. Even more, if you don’t like the product you can return it to the store with no questions. And still more: you can buy from your smart phone while you are commuting and (only in big cities) get the item in two hours in your house. Internet came for B2B at first, but has finally infiltrated to the bone in the retail.
If what happens in the US usually marks the way of what happens to other businesses in other parts of the world a few years later (remember what happened to the print media), if your business has something to do with retail , What is happening today in the US should be a notice to mariners.
For that we can look at what is happening in New York right now, just besides at a time of good economic cycle. We are talking about the “premium” city par excellence worldwide, a city where you can find everything because everything is sold and it has always been an oasis for retail, and where there is no great retail company that values itself that does not have in the city a flag store.
In the following chart you have the percentage of real estate spaces dedicated to retail stores that are empty on 5th Avenue. We talk about the 5th Avenue of NY, the most premium street in the most premium city in the world.
To the effect “purchase by Internet” is added a certain change in the habits of consumption. People today spend more money on restaurants, travel and technology, and less on clothing and other accessories.
In addition, another side effect is occurring. The closures are putting many shopping centers in alert because when you one of the “anchor” stores (like Sears) closes, clauses are activated that allow other stores to renegotiate their contracts down. Only outlet malls are on a roll, but it can’t last.
Another piece of information: between 2010 and 2013 malls in the US have seen their traffic fall by 50%. Amazon is doing a lot of damage.
Welcome to cold winter, retail.