Retail Apocalypse? Think Again (and Blockchain Can Help)
Over the past twenty years, countless articles have predicted the end of brick and mortar commerce at the hands on online retailers. Bankruptcy declarations and closings by Circuit City, Radio Shack, Payless Shoes, Toys R Us, and dozens of other major retailers all represented another nail in the coffin of a local, physical presence — not to mention the tens of thousands of small businesses that shuttered in that same timeframe.
However, the reality is that ecommerce is still a drop in the bucket of retail sales. In 2017, ecommerce sales in the U.S. were under 9% of total retail sales. Ecommerce is growing faster than brick and mortar, but there is still a long way to go before we can declare physical retail dead.
Which Physical Retailers Are Thriving?
In looking at the retail landscape, big box retailers make the headlines but smaller, local businesses seem to be faring the best. In 2015, Mastercard Advisors reported that small business retail accounted for 72% of the growth in total retail sales. The success of smaller retail stores is driven by three factors:
Discount Pricing
Price still matters in retail. Discount retailers like TJ Maxx and Dollar General have flourished in the face of ecommerce threats by continuing to deliver high-quality products at low prices. In 2017, TJ Maxx opened up 65 stores and Dollar General opened up a whopping 1,000 new locations. For cost-conscious consumers, these stores have engendered significant brand loyalty that has helped to spur their growth.
A Sense of Community
Many consumers view shopping as a way to support their local community, especially among the Millennial and Gen Z demographics. 40% of Millennials prefer to shop local, even if it costs more. Smaller retailers are winning over these customers by fostering a strong sense of togetherness, using in-store experiences and social media to consistently remind their customers of the link between successful small businesses and a strong local community.
Custom Product Selection
Consumers have started to seek out uniqueness when shopping, and successful small businesses have capitalized on that trend. According a recent Deloitte survey, over half of the consumers who were planning to shop at small businesses were trying to find one-of-a-kind merchandise. With less shelf space and targeted customer audiences, smaller retailers are able to thrive with smart product curation.
Blockchain Can Bring Physical Retail and Ecommerce Together
Successful retail requires catering to the product and shopping experience needs of a high-affinity consumer audience. Ecommerce does that through enormous product selection, low prices, and a streamlined search-centric experience. Brick and mortar retailers tap into their customers’ need for community and create a browse-centric shopping experience that engages their audience.
Blockchain technology and token economics can combine the best elements of physical retail and ecommerce into a new shopping channel. The decentralized and trust-enabling features of the blockchain allow any venue to become an online marketplace, easily curating products and services that are most engaging for the venue’s community without the need to stock inventory and manage retail logistics. Furthermore, cryptotokens provide an aligned incentive structure to strengthen the community and encourage the growth of this new local economy. By bringing the browse-centric shopping experience online, consumers are able to support local businesses like they prefer to do, venues are able to engage their community, and product vendors are able to get their custom products in front of an interested audience. To learn more about this new commerce channel, check out “Introducing the SesameOpen Network — Decentralizing Ecommerce”.
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