The Crisis of Retail

Does Shopping Still Have a Future? What if Shoppers Became Makers?

Laetitia Vitaud
Apr 13, 2017 · 9 min read
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Why traditional retail is dying a slow death

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  • Internet has brought about new business models that transform ownership into services: rather than owning a car, you can rent a chauffeured car as a service; rather than owning the licence of a particular software, you use software “as a service”; rather than owning DVDs, you pay a monthly fee to access a catalogue of films which you can watch online, etc. Also many of the products that used to be tangible have become intangible and reproducible;
  • Macroeconomic trends are also to blame: the post-war boom years were fuelled by the rising purchasing power of a large empowered middle class who could consume more and more. By contrast, today’s middle classes have seen their purchasing power stagnate or decline over the last three decades. Higher income inequalities are not a good thing for retail because the super rich have a lower propensity to consume. Retail needs the middle classes to be richer because they have a higher propensity to consume. (A household that has a €20,000 annual revenue will spend it all. For that household, an extra €5,000 would also be spent, whereas an extra €5,000 added to a €150,000 annual revenue would be saved, not spent. That’s what’s known as the ‘propensity to consume’). Discount retail has therefore flourished in the past 30 years but the overall value of retail has not;
  • A shift in spending patterns is due to the densification of large urban centres. Storing food is increasingly costly: it requires space, equipment, and a car, which fewer people have in expensive cities. Indeed more urban populations tend to spend more on housing in denser cities, they rarely have a car and they have less room to store large amounts of food. The proportion of consumers with cars and multiple fridges has gone down. Furthermore, the more urban the population, the smaller the average household: there’s no need to store lots of food anymore. Singles can go for fresh food every day and have empty fridges. (Also the urge to store food tends to wane as the last generations that experienced hunger and rationing during the war are progressively dying out);
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  • Shopping has just become boring: the standardised mass-consumption experience of retail stands in sharp contrast with the personalised experience users have online. Algorithms help create an environment designed to cater to the specific needs and tastes of each user whereas supermarkets cater to masses of undistinguishable customers. Shopping is all the more perceived as boring as more and more fun activities are to be experienced online. In some ways, Instagram and Facebook time have replaced the weekly trip to the shopping mall. Increasingly few teenagers now choose to hang out with friends at the mall. Shopping is also less frequently listed as a “hobby” today;
  • Consumers suffer from choice fatigue: overly stimulated by an overload of information about products and brands, consumers seek environments where less is more. People are more likely to not make a decision if they suffer from choice fatigue, i.e. not buy anything. Offering too many choices as supermarkets do actually reduces sales. In our highly saturated retail markets choice fatigue is as much a societal phenomenon as an individual one. (Read our article about ‘Peak Attentionhere).

The neuromarketing takeaway from choice fatigue research is that forcing a consumer to make a series of decisions will tire them out. As the decision-making continues, they will be increasingly reluctant to decide at all, or will choose the most simple choice — often a “no” or “do nothing”.

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What will traditional retail stores be replaced with?

Several trends have already transformed our modern retail landscape and retail’s relationship to space: the success of discounters, the rise of smaller proximity convenience stores, online retail, data-driven omni-channel shopping offers, the opening of pure player brick-and-mortar stores, the increasing number of exclusive brand stores and concepts…

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William Morris

So long as the system of competition in the production and exchange of the means of life goes on, the degradation of the arts will go on; and if that system is to last for ever, then art is doomed, and will surely die; that is to say, civilisation will die. (William Morris)

The utopia Morris published in 1890, News from Nowhere, is now a classic. It combines utopian socialism and soft science fiction. In the novel, the narrator, William Guest, falls asleep after returning from a meeting of the Socialist League and awakes to find himself in a future society based on common ownership and democratic control of the means of production. In this utopian society there is no private property, no big cities, no authority, no monetary system, no divorce, no courts, no prisons, and no class systems. The people find pleasure in nature, and in their work.


WillBe Group

Strategy and Management Consulting to accelerate value…

Laetitia Vitaud

Written by

I write about #FutureOfWork #HR #freelancing #craftsmanship #feminism Editor in chief of Welcome to the Jungle media for recruiters laetitiavitaud.com

WillBe Group

Strategy and Management Consulting to accelerate value creation

Laetitia Vitaud

Written by

I write about #FutureOfWork #HR #freelancing #craftsmanship #feminism Editor in chief of Welcome to the Jungle media for recruiters laetitiavitaud.com

WillBe Group

Strategy and Management Consulting to accelerate value creation

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