Yahoo Finance Presents: The Retail Revolution

Yahoo Begins Retail Revolution

The retail business has been evolving at a dizzying pace. Sure, fashion trends have always come and gone, and stores have always opened and closed. But what we are experiencing now is different. How, what and where we shop is different today than just five, two or even one year ago. This unforgiving pace of change is aptly captured in Amazon’s log-scaled stock price chart, which is essentially a manifestation of Moore’s Law applied to retail.

While e-commerce continues to capture only a fraction of the overall consumer retail market (13% of 2017’s $3.5 billion total adjusted U.S. retail sales, or less, depending on how you slice the market), e-commerce punches above its weight contributing to 49% of the sector’s year-over-year growth, according to data released by the U.S. Commerce Department in February. The omni-connected consumer and “never closed” retailer have and will continue to transform the sector both online and off.

This is the Retail Revolution.

In the coming days, Yahoo Finance will explore the various ways disruption is affecting the ways consumers shop and retailers conduct business. We’ll delve into the ways e-commerce has changed the consumer experience, how brick-and-mortar is evolving and why it will stay relevant, what next-generation payment systems are doing to speed up transactions, and then we’ll go on to examine the profound implications for the economy.

Part 1: What Online Enables for Retail

Shopping and selling, both online and off, has never been more competitive – with an increasing number of hawkers using an arsenal of technology to capture the attention of savvy consumers who carry in their pockets the ability to continuously find a better deal. (Or, at least, consumers believe they can – read Monday’s article on search insanity to understand the power of search engines to influence what a consumer thinks they know and consequently what they buy). Both new and incumbent brands increasingly harness the internet, adtech and social media to go “direct-to-consumer,” to develop an omni-present relationship with consumers in the hopes that the myriad daily product offerings begin to feel like subtle persuasions of a dear old friend rather than price haggling of a vibrant Turkish bazaar.

Hand-in-hand with social media and the conversations brands have with customers, is the power of influence. From eBay, Etsy and Instagram to athletes, Hollywood celebrities and everyday bloggers, individuals are leveraging their influence to create and cash-in on products. And whether brands want to or not, consumers are demanding through these conversations, that the products they buy have a point of view. Yahoo Finance talks to brand leaders such as Steve Madden, who are increasingly speaking out on political and social issues such as marriage equality, standing for the national anthem, sexual harassment, the sale of guns, and more.

As a result, the brands that break through the noise by offering superior convenience, customer service and personalization, value proposition, price transparency, branding, and/or in combination with first mover advantage have been able to gain share and through platformization win a category. Companies that scaled to IPOs or $1 billion-plus strategic acquisitions last year, include Etsy, StitchFix, Wayfair, Jet, Dollar Shave Club and more.

There is an elephant in the room during every conversation with and about retailers, and it’s not just a river in South America. Yes, no conversation about e-commerce, let alone retail, could be complete without digging into the “Amazon Effect.” Whether one sells furniture, flowers, home improvement, luxury fashion or operates airport new stands, retailers seek to isolate their businesses from Amazon’s reach (or at least current attention). Given Amazon’s domination at nearly 50% of the total e-commerce market combined with a growing physical footprint, competitors cannot sit on their laurels and just expect their business to remain “Amazon-proof”.

Part 2: Brick-and-Mortar isn’t going anywhere

Despite headline grabbing announcements of record store closures, bankruptcies, and “the death of the mall,” retailers in 2017 actually opened more stores than closed according to a 2017 report from IHL Group. The growth in brick-and-mortar is primarily due to the expansion of deep discount retailers, such as Dollar General and Dollar Tree stores. Yahoo Finance speaks with retailers and industry experts that insist brick-and-mortar isn’t going anywhere.

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