The picture is not pretty. Coresight Research expects 20,000 to 25,000 brick and mortar retailers to shutter in 2020, increasing more than 100% from 2019. The company also expects 55 to 60% of mall-based stores to close their doors. That estimate is in line with a Green Street Advisors prediction as well.
Malls are facing an even greater challenge as anchor department stores are dropping like flies. J.C. Penney announced plans to close 242 locations, Macy's will shutter 125 stores or 20% of its inventory in the next three years and Nordstrom plans to close 16 of its 116 locations. Lord & Taylor announced it is shutting down its entire operation. UBS predicts that 20 to 25% of malls in the U.S. will close by 2025.
The pandemic has forced U.S. consumers to buy online and that will accelerate the percentage of online retail purchases to 25% by 2025, up from 15% in 2019. All retail sales are expected to drop in 2020. Experts predict declines ranging from 6.5% to 10.5%.
The pandemic has caused another dynamic change to the retail landscape. An estimated $125 billion in retail sales shifted from department stores, clothing, furniture, appliances, jewelry and sporting goods to grocery, mass merchants, warehouse clubs and online etailers, reports IHL. The company also estimates that more than $250 billion in sales moved from small retailers to large corporations over a three month period, due largely to the fact that Home Depot, Target, Best Buy, and Lowes were considered essential businesses where they could stay open. Smaller retailers did not have that advantage and had to shut down from state-issued states of emergency.
BKBG showrooms can benefit from the lessons taught by large department stores such as Macy's and J.C. Penney, Neiman Marcus and others that are teetering on the verge of extinction. Moving forward, the customer experience needs to be that, an experience. If someone is going to make an effort to get off a couch and drive to your showroom, there is heightened expectations. Consumers will demand more than the ability to see, touch and engage with working displays. Because of the rapid growth of online purchasing, consumers will expect a frictionless shopping experience. Charging for freight may have to be incorporated into the product's cost instead of a separate line item. Showrooms and manufacturers will need to partner to lower shipping times because many consumers may not understand why they have to wait 10 to 12 weeks or longer for their cabinets to arrive.
Consumers will expect showroom team members to know more than they do and curate their purchasing to ensure that their projects' goals are at a minimum met and as a standard exceeded. Showrooms will need to modernize and leverage the current concern for health and well-being into a marketing advantage. Showrooms know how to convert an existing bath into a wellness center. Showrooms know how to renovate an existing kitchen into a space that promotes healthier meals and lifestyles.