Over the last few years, shoppers have witnessed the rapid transformation of the retail market. Rules on how we shop, where we shop and when we shop have changed dramatically.
The emergence of e-commerce and the so-called “Amazon Effect” have disrupted the industry and created an ongoing consumer shift to online shopping. That has created havoc for traditional retailers, forcing the closure of many brick-and-mortar stores and a rapid decline in sales for big box retailers and mall stores.
The National Retail Federation projects online retail sales grew between 8 and 12 percent in 2017. That number is three times higher than the expected growth of retail as a whole. Last year, Amazon alone accounted for an estimated 53 percent of U.S. online sales growth; 83 percent of online shoppers bought something on Amazon, and before making a purchase, 55 percent used the site as a research tool.
Brick-and-mortar retail, by contrast, is expected to grow by just 2.8 percent this year. According to Credit Suisse, over 8,600 U.S. retail stores could close their doors this year alone. While in-person sales are still important, the shift in shopping habits have left national and local retailers scrambling to keep up with the changes.
Charles Lindsey, associate professor of marketing at UB’s School of Management, says although he doesn’t see much downside for consumers, the explosive growth in e-commerce has been disruptive for retailers. So how are local businesses faring?
Liz Lennon, owner of Mabel Danahy, an Amherst women’s clothing store, admits there have always been challenges — today’s are just different.
“I don’t think there are a lot of stores like us around Buffalo, so our biggest competition now are those vendors who sell online. For us, it always has been, and always will have to be, the service.”
Mabel Danahy buyer Pat Seitz began to see a change starting in 2008, when buyers and vendors were suddenly no longer around during her biannual market trips. But she thinks there is still hope for certain types of retailers.
“I think malls are going to end up dying and I think the small specialty stores, the strong ones, will survive,” says Seitz.
Because of the store’s longevity (it opened in 1925), Seitz notes it has a strong reputation and solid vendor relationships, which translates to benefits for consumers like early deliveries, exchanges, trunk shows and help with product searches. The store also offers alterations, special orders and gift wrapping, services that are no longer available at larger department stores.
Lindsey says that for small retailers to stay relevant and survive the shift, they need to be “uber consumer-centric, offering state-of-the-art customer experiences.”
“We all know it’s a tough market out there,” said Lennon. “You have to give people a reason to keep coming through the door,” Danahy’s is currently working on a joint event with Lace and Day, an Allentown business specializing in bra fitting, undergarments and sleepwear, that will spotlight the personalized experience they offer customers.
Lace and Day owners Emily Constantine Doren and Holly Constantine Ortman were aware of the robust e-commerce economy when they opened in 2015, but because their business is more service-based than other retailers, they didn’t see that as an obstacle.
With an extensive inventory and expert fitters, it makes sense that many women would prefer to purchase undergarments in person rather than online. “There is no substitute for an expert fitter,” says Doren. Their biggest challenge is the lack of awareness about the importance of a good bra fitting.
Men’s retailers have experienced similar challenges. Napoli’s began seeing changes around 10 years ago, when brands they carried opened their own online stores, selling directly to consumers.
“We dropped a few brands that became online discounters,” says Tom Napoli, buyer and floor manager. The clothing store was being forced to mark down merchandise a week after receiving it.
Today, they are more selective about the brands they choose to carry. They also differentiate themselves with service.
“At the end of the day, you need a hands-on specialist, someone who understands the fashion part of shopping, but most importantly the tailoring and fitting aspect of buying tailored clothing,” says Napoli. “That’s what we do best.”
Napoli’s father Joe opened the store in 1972 on Bailey and Lovejoy, later joined by brother Tony. Together they built the business into a premier men’s store, and this past year moved to a new 7,000-square-foot store on Main Street in Williamsville.
“I have shared this business with my father all of my life. I look at this store like it’s part of my family, something that I love and want to nourish,” says Napoli.
In order to stay relevant in today’s turbulent market, Napoli continues to follow the lessons learned from his father and uncle — advice that rings true for all brick-and-mortar retailers in today’s market: “Always provide the best customer service. Give them a reason to come back and stay loyal.”