This holiday season, I thought it would be interesting to discuss a well-covered, yet somewhat misleading narrative that is being pushed by the media outlets, The Retail Apocalypse.  Online sales hit a record-breaking $91.7 billion this holiday season, up from $82.5 billion last year.  This impressive number may have some physical storefronts panicking, but the total retail sales this holiday season peaked at $598 billion, a $33 billion increase from last year. That means a substantial amount of the total holiday retail sales was made in physical storefronts.

So if you follow the media, you might think that given the dreary narrative for physical retailers, the rise of online retailers would lead to shrinking sales for physical stores during the 2017 holiday season. Well, think again. Online sales are growing, and some physical storefronts have suffered, but holiday sales in physical stores actually increased in 2017. This means that now, more than ever, it is imperative that storefront retailers connect with consumers on as many physical, emotional, and behavioral levels as possible, and that is the focus of this article.

What is The Retail Apocalypse

The retail apocalypse refers to the closing of a large number of retail stores and shopping malls across the country. This began in 2016, and although the root cause is often blamed on online retailers like Amazon taking a larger percentage of the market share, it is actually due to many well-known departments stores, chains, and brands being overloaded with debt as a result of leveraged buyouts by private equity firms. Sound like a familiar concept? We are seeing this same model in several sectors in the economy.

According to Forbes, the media coverage is exaggerated, and the retail sector is simply evolving. The research and advisory services firm The IHL Group, states that retail sales are up by more than $100 billion this year, and 4,000 more chain stores have opened than closed in the U.S. The most successful retailers that are prospering during the retail apocalypse are the low-cost, “fast-fashion” brands such as Zara and H&M, and experience-based physical retailers. These are the brands that have seen beyond the hysteria and are forming connections with consumers, targeting them successfully, and converting them into long-term, loyal customers.

How To Survive the Retail Apocalypse

The retail apocalypse mostly impacts the middle-class, where consumers are experiencing a decrease in income while costs increase for things like housing, healthcare, and education. The way Americans shop is also undergoing a fundamental reboot. As more people shop online, the stores that are successfully drawing in customers are those that emphasize experience-based brand connections. This is slowly diminishing the line between e-commerce and physical retail. Virtual stores are also increasing their physical presence. Take a look at Amazon opening bookstores and their acquisition of Whole Foods. Here you have one of the largest e-commerce retailers expanding their physical footprint in cities across the country. Apple has flipped the electronics experience on its head, with their stores showcasing not only cutting-edge products but cutting-edge interior designs, as well as providing services and advice for customers. This has lead to one of the most powerful community-brand connections in the marketplace and is one of the biggest parts of Apple’s differentiation from the competition.  Most Apple customers are loyal customers, purchasing multiple Apple products, and continue to do so year after year.

These successful retailers have created a hybrid-model where consumers can engage in multiple ways with their favorite brands and products, with the freedom to buy the way they want, either online or in-store. Consumers want to sit on that new couch, try out that new iPhone, and feel a connection to the brand. But they want the freedom to buy at their convenience without being bombarded with ads on their various devices. Although these are price-sensitive consumers, when they feel connected to the brand, they don’t mind paying a premium, as long as it is on their terms.

Conclusion

With the e-commerce vs. physical-commerce battle continuing, when it comes to marketing, it all starts with defining the brand connection and understanding how the consumer shift between e-commerce and physical-commerce is forcing a change in the way shopping is done. So relevant marketing content is king, experience-based retail environments help to connect consumers with brands, and providing consumers with the flexibility to educate themselves and purchase on their own terms are the keys to surviving the retail apocalypse.