While market analysts, C-suite executives, and shareholders continue to reference well-worn data to explain away the shit-storm currently pelting the retail industry, one Bloomberg columnist has a simpler take on things: it’s the consumer that’s changed, and the industry never saw it coming.
Identifying five key elements as “prime drivers of the new “retail misery index”” — income, inflation, time, psychology, and technology — author Barry Ritholtz argues that consumer priorities are shifting as rapidly as the technology servicing those priorities, and that “retailers have been having difficulty understanding these changes, much less responding to them.”
For instance, “People are trying to move away from materialism and toward ‘experiencism,’” he writes, but the funds for those experiences tend to get taken right out of the Stuff Budget, which ultimately hurts the retail industry’s bottom line. And, speaking of budgets, “new product and service categories” like Netflix, Amazon Prime, and Spotify, “put household budgets under significant pressure.”
“These factors all contribute to a downsizing of retail [in] America. But the transformation is much more than total square footage and dollar sale volumes. We are undergoing a fundamental change in how society consumes products.”
Is the argument slightly reductionist? Sure. Does it get at a fundamental truth in today’s economy? Also, sure. We don’t like to spend time on the same things we used to, and if we’re going to wait for something, the proliferation of “it’s like GrubHub but for…” apps seem to signal that we want to do so at home — in the company of our other apps — and not “circling the mall parking lot.”
You can read more about it at Bloomberg.