Brick and mortar stores will not go down without a fight. Despite the fact thousands of retailers are closing locations, others are looking for creative ways to stay alive. That said, there are challenges galore.
There are fixed costs to keep a building open, lights on and staff in place. There are investors who are more interested in dividends than creative ideas. Pressure from investors leads CEOs to worry more about quarterly earnings reports than long-term growth.
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3 Lessons Learned
With online entities like Amazon.com Inc. (NASDAQ:AMZNC) announcing one physical retail format after another to directly compete with brick and mortar, traditional companies like Wal-Mart Stores Inc. (NYSE:WMTB) and Target Corp. (NYSE:TGTB) are acquiring brands, building their own online networks and taking time to learn valuable lessons.
Those lessons include the need to collect and use customer data just like Amazon, Netflix Inc. (NASDAQ:NFLXC) and Alphabet Inc. (NASDAQ:GOOGC) have to achieve success in retail, media and advertising. They’ve also learned the value of automation and personalization and the fact it has to be translated to a retail setting. Finally, they learned the value of ground-breaking technology to help sellers know what buyers want to buy and when they want to buy it.
Off Price Stores
Nobody knows for sure how the war between online and brick and mortar will end. Some retail gurus have a hunch about who will still be standing when the war is over. For example, stores that sell other maker’s brands, will be at risk. Amazon can do that and it can do it cheaper, faster and with more variety.
Off-price retailers, on the other hand, may do well. That’s because brands that need to clear out inventory don’t really want that inventory to show up online. Stores in that vein who are getting ‘buy’ ratings by Morgan Stanley analysts include Ross Stores Inc. (NASDAQ: ROSS), Burlington Stores Inc. (NYSE:BURLC) and TJX Companies Inc. (NYSE:TJXB).
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Other Strokes For Other Folks
Some chains have turned previous disadvantages around. In each case, naysayers have changed their minds and now have a positive outlook on those companies. One is Best Buy Co., Inc. (NYSE:BBYC) which was thought to be doomed thanks to showrooming, a habit customers had of going into Best Buy stores to check out merchandise, then buying it online for less. Best Buy’s solution – ramping up the e-commerce side, engaging in price-matching and focusing on mobile phone sales.
Dollar General Corp. (NYSE:DGC) concentrated on lots of small stores with minimal staff and inexpensive merchandise. Small stores are enticing to consumers who want to get in and out quickly. Finally, Home Depot Inc. (NYSE:HDC) is making its mark by selling things people don’t buy online – plants, soil, lawn mowers, tools and yes, kitchen sinks.