It has been a tough decade for brick-and-mortar retailers, and matters seem only to be getting worse.
Despite a strong consumer economy, physical retailers closed more than 9,000 stores in 2019 — more than the total in 2018, which surpassed the record of 2017. Already this year, retailers have announced more than 1,200 more intended closings, including 125 Macy’s stores.
Some people call what has happened to the shopping landscape “the retail apocalypse.” It is easy to chalk it up to the rise of e-commerce, which has thrived while physical stores struggle. And there is no denying that Amazon and other online retailers have changed consumer behavior radically or that big retailers like Walmart and Target have tried to beef up their own online presence.
But this can be overstated.
To begin with, while e-commerce is growing sharply, it may not be nearly as big as you think. The Census Bureau keeps official track. Online sales have grown tremendously in the last 20 years, rising from $5 billion per quarter to almost $155 billion per quarter. But Internet shopping still represents only 11 percent of the entire retail sales total.
Furthermore, more than 70 percent of retail spending in the United States is in categories that have had slow encroachment from the Internet, either because of the nature of the product or because of laws or regulations that govern distribution. This includes spending on automobiles, gasoline, home improvement and garden supplies, drugs and pharmacy, food and drink.
Collectively, three major economic forces have had an even bigger impact on brick-and-mortar retail than the Internet has.