Retailers emerged fairly unscathed during the first wave of the internet in the ’90s because consumers still by and large chose to shop in physical stores staffed with employees that strived to provide customer service.
Those days are long gone thanks to Amazon and the latest wave of technology that makes it convenient for consumers to shop from anywhere via ecommerce sites and mobile apps.
A quick glance through recent headlines reveals why retailers are hustling to embrace ecommerce and become more digitally minded businesses: Toys R Us plans to close 800 stores this year as it likely begins to phase out its U.S. operations; Best Buy will shutter all 250 of its small retail sites that sell mobile phones; and Foot Locker plans to shut down 110 stores to focus on high-performing locations.
Publicly held brands also have to position themselves as cutting edge for investors to compete alongside Amazon, Alibaba and other ecommerce giants.
“The challenge to traditional retail is approaching innovation in the right way,” said Matt Kaden, managing director of MMG Advisors, a retail financial advisory service firm.
“It’s not just the Amazon effect, it’s dealing with Wall Street—they don’t have the rope that an Amazon has to not deliver profitability and continue to see your stock price increase.”