Sensational headlines by the tabloids as usual but there is a grain of truth. The retailers in crisis are the ones that are no longer relevant, have lost touch with their customer base and don’t use everything available to connect with new customers.
It’s really no surprise that Toys r Us collapsed as they haven’t changed in the last twenty years. They operated in a discretionary spend market where if cash is tight then its one of the first things to go.
Having predominantly a bricks and mortar presence put it at a distinct disadvantage with growing competition from multi-market retailers like Amazon, Tesco, Asda and Argos. All of these have a strong online presence and have amassed a great deal of data from consumer spending. Online has become easier and more convenient for consumers as more retailers use the Amazon footprint. Retailers now have to work harder than ever before to get people into the shops.
With costs rising on every line of the P&L, the pressure on margins can only be relieved if the distribution is better, in other words doing more with less. Many retailers are looking at the size of their estates and fixed costs cutting down the number of outlets. This has the detrimental effect of disenfranchisement of the customers they have in that location that may go elsewhere. There are many alternatives to explore before closing stores but the overall success would be dependent on getting everything else right.
Consumers today are better informed and will research many purchases online prior to making decisions.
Ignore the warning signs given by your customers spending less, visiting less frequently or using you for the basics and you also could become a victim of progress.