Last year, there were more than 660 bankruptcies filings in the US retail sector alone, a 30% increase from 2016, with more than 7.000 store closing announcements, according to BankruptcyData.com. Furthermore, the total number of US store fell for the first time last year, since 2009.
Shops closing at 10 PM, in-store discounts, busy parking lots, rolling shopping carts around the store and waiting in long cashier lines are starting to look more and more like habits from a different day and age. Not at all what modern retail looks like.
Last year marked one of the toughest periods in the history of traditional retail, shoppers proving the hard way, time after time, that they want to be digital and they want to be mobile, to purchase whenever they want, from wherever they want.
While the US economy had a healthy recovery last year, companies hired almost 2 million, and the unemployment level got to a 17-year low, the retail industry was one of the biggest job losers, with more than 36.000 jobs cuts, according to CNN. However, not all job losses are due to store closings, but rather due to automation and job shifts towards the online departments, where the positions are no longer counted as ‘retail jobs’.
The retail industry, however, is not yet dead and buried. Total offline retail sales grew by approximately 2.5% last year, despite a sharp decline of in-store traffic, of nearly 8%. Yet, when we look at e-commerce growth, we see an increase of 15% in Q3 2017 and an estimated overall increase of 14% yoy. That’s a huge difference.
Traditional retail is struggling
On the list of US major retailers that filed for bankruptcy are Toys R Us, Payless Shoes, Gymboree and Rue21. While dozens of important brick-and-mortar names are struggling, Amazon shares increased by 55% this year.
Among the big names in the US retail, Walmart is a good example of a sleeping giant waking up. The retailer is massively investing in extending their online presence, a bet which is already paying off.
According to eMarketer, Walmart currently ranks the third in US ecommerce sales shares, topped only by Amazon and eBay. This is an impressive turnaround, considering they are also the biggest brick-and-mortar retailer in the world.
Retail, a major opportunity for the analytics industry
While the press is already talking about a ‘retail apocalypse’, if we look beyond the flashy titles we can see that the whole brick-and-mortar industry is struggling, while e-commerce is thriving and gaining more traction.
As every story has two perspectives, this is no exception. There are two ways to look at this: you can see a dying industry or you can see a huge opportunity for growth, for both the analytics and the retail industry.
There are thousands and thousands of stores and retail brands that have a huge growth potential if they choose to go online. And there are many analytics companies that can help with the transition, to be as effective and as lucrative as possible.
Forecasts estimate that the global retail analytics market will reach $8.64 billion by 2022, while the global online retail market will surpass $4.4 trillion by 2021. In 2017, the global analytics market was only $3.52 billion, while the retail market was $2.29 trillion.
What’s in it for analysts: How can you benefit from the retail industry?
“The major driving factors for this market are growing internet penetration, increased use of data-intensive platforms and rapid adoption of social media, and advancement in technologies, such as machine learning, artificial intelligence, and augmented reality. The proliferation of cloud-based analytics and growing inclination of vendors toward merging in-store and digital operations are key opportunities that would fuel the growth of the retail analytics market”, according to a study conducted by marketsandmarkets.
Analysts can provide unparalleled value for retailers. With the help of digital analytics, store owners and brands can establish a healthy online presence and can target exactly the audience they want to.
Digital consultancies can help with customer management, provide clean customer segmentation, retention and acquisition data. Retailers need to map their customer’s journey, and with the help of analytics they can get data-driven insights about their clients and their behavior.
“Adoption of retail analytics solutions that deals with a huge volume of historical and real-time data, such as predictive analytics solutions, helps retailers to statistically forecast dynamic changes in the external and internal environment of the retail enterprise, thereby enabling them to take actionable insights.”
It’s time for analysts to focus on brick-and-mortar retailers, persuade them to take a leap of faith and choose to invest in the data driven way of doing business.
PS: if you need any help with your digital transformation, take a look at our free products (Cognetik Cloud Connector and Data Streams), or even at the services Cognetik offers. Or just drop us a line with your questions, we’re happy to chat anytime.