In our last newsletter, we detailed the Retail Apocalypse. Perhaps we heralded this shopping doomsday too soon. With the latest news about store closures and business bankruptcy, it’s easy to give up on the classic brick-and-mortar retail place. As people seem to spend less on items and more on travel, according to Business Insider, retail could be on its way out eventually. However, if there’s one thing that is predictable about the market, it’s that it can sometimes be unpredictable. Amazon’s recent acquisition of Whole Foods alone proves that retail might not be facing an apocalypse so much as a digital makeover.
Last week, the online retailer site Amazon announced its $13.7 billion (including debt) purchase Whole Foods Markets, signaling a significant new step for the company outside online purchases. In addition to this purchase, Amazon has also announced a plan known as Prime Wardrobe, a system to allow customers to try on clothing and shoes before purchasing them, to expand its fashion retail as well. Many analysts note that these moves signal not a revitalization of classic retail stores but a reliance on them as well. After all, why would a company like Amazon spend billions on a system that is supposedly out of style? In fact, based on these announcements as well as Amazon’s continuing plan to break into pharmaceutical areas, retail stores still seem to have some value outside of online services.
Perhaps the classic brick-and-mortar stores just offer a sense of security, consistency, and personality. Offline sources have, for longer than Amazon, often gathered customer movements in real time to understand what products were preferable. Since people have always relied on going to stores for goods, the retail store remains a staple of the industry. Of course, regarding Whole Foods, food retail remains a reliable source of physical shopping with people going for food on average twice weekly. Though the places to find food or clothes have been static for quite a while, that’s not to say that the system cannot be improved upon for efficiency.
While retail stores might still have a place in the digital revolution, they may have to tackle a new set of standards to keep up with the competition. The latest purchase of Whole Foods offers Amazon a real-world base to test out online systems ranging from increased WiFi to visitor data profiling. With Amazon’s system of big data, Whole Foods might soon be able to access customer preferences with groceries and allow them to make recommendations for additional purchases in real time. This could also connect to Amazon’s home delivery system where grocery preferences can already be suggested for purchase before heading to store. In essence, this new method of purchase is not a preference of physical or digital stores but a combination of both.
Still, none of this guarantees that Amazon’s new method is sure to work or benefit the classic retail store. Indeed, some retail stores have seen drops in stocks following Amazon’s announcement. Nevertheless, this method proves there are still new horizons out there for the retail business. The future may be digital, but at least there is still a future at all for retail stores.