2020 Starting Off With More Retail CarnagesteemCreated with Sketch.

in LeoFinance •  5 months ago 

The year of 2019 was not a good one for the retail sector. It was the worst year ever in terms of store closings. There were 9,302 stores that bit it during the year.

This year is starting off with an announced 450 store closings from Pier 1 along with a likely bankruptcy.

In 2015, the stock was trading above $300 compared to $5 now.


Source

The last few years saw the obliteration of many of the physical retailers. Online sales have cut into the in-store traffic. Changes in preferences have also saw damage on those which were slow to change their ways.

Pier 1 lost $59 million during the last quarter. Sales at stores open at least a year dropped more than 11%.

https://www.cnn.com/2020/01/06/business/pier-1-imports-bankruptcy/index.html

Few companies has caused so much destruction like Amazon did to the entire retail sector. This was the main company that was behind the retail apocalypse. Most companies are suffering due to the lead that Amazon took.

In recent years, companies such as Wal-Mart and Target invested heavily in their online offerings. This is creating a new era where a handful of companies are excelling while the rest of the sector falls apart.

Pier 1 is likely to be only the beginning of another year of collapse of the physical retail industry. Mall traffic is still way down causing those chains to be on the brink of bankruptcy. Last year saw the end of Payless Shoe Stores, a brand that was heavily invested in the mall business.

Technology is driving this traditional industry at a fast pace. I foresee a time when companies are able to establish full end-to-end automation. This means that from order to deliver, the entire process will be done sans human intervention.

Amazon is already working on this concept.

Another factor going forward will be the development of virtual reality. It is likely that physical stores will be replaced, at least in part, by VR stores. These will look similar to what we have now just in the virtual world.

As the headset and other devices reach the masses, this will only accelerate the transformation of this industry.


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Wow, I didn't realize the price was $300 in 2015, sad day as hundreds of people will be losing their jobs. And you made an awesome point, we will be able to shop and see how furniture fits in our house, right from out house...which means the retail space should shrink even more.


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Yeah I didnt realize it was that high either. Imagine riding that one down.

It always sucks for workers who end up unemployed, usually through no fault of their own.


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Amazon might not be the only problem here. Best Buy, Walmart and even Indigo were all able to survive in the wake of Amazon so why not Pier 1? The problem might just be inertia to change on their part and embrace the online world of this century than anything else. An example of such inertia is ignoring the impact AI will have on organizations this decade (you can read my series on this here) and can easily be likened to moving against a moving train - only bad things can happen.

Certainly there is the fact that competition did things that Pier 1 did not. Wal-Mart spend a fortune to play catch up. Best Buy started to add things to its stores such as appliances in an effort to thwart the move online.

I am sure there were things that Pier 1 could have done but didnt.

However, the shift online has had a giant impact.

And yes missing the AI move over the next 5 years is likely a fast track to bankruptcy. Fortunately, that got enough press that if one misses it, that company is living under a rock.


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