The U.S. retail sector is overstored and out of step in an era of e-commerce.When examining any sector, it’s always important to take the temperature of ‘those in the know.’ That’s especially true when it comes to the ever-changing retail industry, as some valuable clues can be gleaned from those that have the foresight to look ahead. Analysts that work for financial powerhouse Goldman Sachs can indeed be considered to be in the know, as their entire livelihood depends on being ahead of the curve. Let’s follow the money and see what analyst Matthew Fassler had to say in a recent, not to investors.
As CNBC shares, Fassler pulled no punches while delivering his assessment on the state of retail, but he also pointed out that the doom and gloom narrative is overblown.
"The U.S. retail sector is overstored and out of step in an era of e-commerce," he wrote. "But retail is not dead; it is changing. How brick-and-mortar stores employ new technologies, and new models may determine how they survive the relentless shift online."
As Fassler sees it, that means a couple of things for the future. Those that change with the times can position themselves to continue being major players, while those that fall to adapt will get left behind.
"The retailer of the future will likely be a retailer of the past — just the most efficient version therein,” he continued. "Despite the rapid and seemingly relentless rise of e-commerce, rolling forward its recent 15% growth rate on a progressively larger base still results in 70% of retail sales via the store in five years' time. From within the group of incumbents, the successful retailer of the future will need to operate either as an optimized logistics machine, an ultra-convenient shopping option, or an optimized showroom."
That’s some incredibly valuable advice that all retailers would be wise to internalize, and Fassler also offered up some actionable steps that should receive some serious consideration.
"Retailers selling commodity goods will need to migrate their supply chains toward these hyper-efficient models. At the other extreme, stores that present a brand immersively, experientially, and interactively will still be able to battle for consumers' attention," he continued. "The retailer of the future will ... have to tighten its relationship with its customer. Store-based retailers, in contrast, rarely know who is walking in their store, which departments they visit, or how close they come to purchase."
Those are some fascinating takeaways. As with most things in life, following the money will provide you with a ton of clues that point to the most successful path forward.