A new year and more retail stores are set to close.
In 2019 we saw the closing of over 9,000 national retail stores, owned by reliable brand names like Payless, Gymobree, DressBarn, Charlotte Russe, Game Stop and Destination Maternity.
2020's already off to a bad start for retail. Stationery stop Papyrus just announced that they are totally shutting down all operations in the next 4 to 6 weeks. For the year, the estimate is already 25% more stores will close than did in 2019 — a total of 12,000 stores. Notable names shutting down or scaling back are Pier 1, Gap, Walgreens, Chico’s Forever 21, A.C. Moore, Bose, Olympia Sports, Sears, Kmart, Bed, Bath & Beyond, Express, Macy’s and JCPenney.
Clearly some of this business is going to the e-commerce elephant in the room, Amazon. But a new study found that “84 percent of Americans prefer to shop at brick-and-mortar stores or at a combination of online and in-store retailers.” Brick and mortar retail is here to stay.
Our contrarian view at Supplied is that a lot of the void being left by these large retailers will be filled by small businesses, not Amazon. The data suggests that sales are growing year over year for categories such as independent bookstores, clothing stores and grocery stores. If you are buying diapers, or toilet paper it’s clear that Amazon or Walmart are the most efficient destinations for those type of products. But in a world where all of our basic needs are met, people actually go shopping because they enjoy it. Amazon and Walmart are convenience plays, but they don’t satisfy the inherent joy that most people find in curating, exploring and discovering new products.
At Supplied we believe that the significant growth of independent store owners will be a macro trend in the future of brick and mortar retail. Human beings want an experience that is customized and curated for their tastes and independent store owners can do a much better job of catering to a specific niche market than a large national chain.
Giving inertia to this trend is that more and more technology is being developed to ensure that independent store owners can be successful. Square has democratized and simplified the POS system; Quickbooks has made accounting extremely accessible; Instagram allows store owners to create and maintain niche communities, Shopify allows you to go omni-channel and services like Yelp allow local stores to target people within their community. Supplied is building out the category of providing independent retail stores with the same manufacturing supply chain that once massive retailers could only enjoy.
The exciting thing is that this trend is not only relegated to large cities like Los Angeles and New York. It’s a global trend that is even evident in small cities. In our travels last year we observed these type of curated niche independent retail in Oklahoma, Mexico City, and even in small tourists destinations such as Boracay.
The future is independent.