Is Traditional Retail Dead?
As new businesses take shape, their products are created, tested and ready to debut to the market. It’s an exciting time for an entrepreneur, the dream has turned into a tangible reality, the next step, and by far most important is selling it to the consumer.
Traditionally the most common method in existence since the early days of commerce, display the product at a market or retail outlet for purveyors, passers by, to take notice and purchase the items in person, parting ways with their cash to in exchange for your product.
For centuries salespeople have laboriously vied to attract the prodding eye of a potential customer, from elaborate displays seen at the bazars of the far east, to engaging demonstrations at expos or fairs, the goal has always been to attract people to your product in person and generate sales.
In the modern era most of the same concepts still exist, however, there is a notable difference in the retail landscape compared to yesteryear, the prevalence of large-scale or “big-box” retailers. Billion-dollar organizations which have rose up to dominate the world of commerce, almost to a level of monopoly. They stand with an omnipotent presence and have controlled the flow of consumers and cash for the longest time. That is until technology started to take over, and the rise of e-commerce has become a formidable opponent to the previously known goliath group of corporations that would seemingly never cede their grip on the marketplace.
The major retail outlets that once dominated every household, city and neighborhood have become shadows of themselves. Their empty locations scattered across the nation, lend the mind a memory of the hollowed out shells of the behemoth that once was, and in most cases create a sense of nostalgia for a time since passed. Sears, once the largest company in America which was once the namesake of the tallest building in the world, is now completely disappeared after filing for bankruptcy. Blockbuster the movie and game rental giant, vanished rapidly across the nation. Both of these and may more retail outlets have been slayed by the stroke of the sharpened blade of e-commerce.
Today over 273 million Americans (80.4%) shop online spending over $1.36 Trillion in 2024. Thise figures are expected to double by 2030 to $2.5 Trillion. As the consumer has shifted to buying online the remaining larger retailers have adjusted, and have begun to offer online shopping options, new massive conglomerates have emerged the likes of which include Amazon, Temu and Alibaba.
With the shift in consumer behavior, small businesses have to adapt as well. Having their products available for online purchase is crucial, today almost a requirement. Nothing wrong with having a product in a physical store or location, however for small businesses there is significant overhead to consider, retail stores require business to cover the costs for logistics, storage and insurance fees, and in many cases take losses on unsold inventory. Not to mention a large portion of the proceeds on sales which cut into a business’s bottom line heavily. In addition, time, money and effort are required in getting the chance to list your product on a retailer’s site or in stores, it all takes a hefty initial investment and, in most cases, especially when starting out, companies do not see a profitable return in large part due to newer brands not having the brand recognition to generate significant sales.
While small businesses can have their products sold online via a big-box retailer they could also sell it themselves via their own online store.
This is the golden opportunity to get max value that a lot of newer businesses tend to overlook. There are significant benefits to this, not just avoiding having to pay a retailer’s commissions or weave through countless red tape, but unlock the ability to remain flexible and adaptive to the ever-changing marketplace, environment and trends.
By selling a product direct to consumer, the business can set its own pricing, create promotions, generate pre-sales, control inventory and supply, also invest in marketing to bring customers to buy through them directly as opposed to a third-party platform. It is strongly advisable, especially at the outset of launching a product or brand, to take this route. The more control of the brand and sales the better the ability to adapt and stay ahead, which is essential in creating longevity and sustainability.
Furthermore, social media platforms, offer retail options as well, a significant opportunity to combine a marketing strategy and purchasing literally at a consumer’s fingertips anytime and anywhere.
Invest in the future of the brand, don’t neglect the power of the direct connection to the customer, it builds a relationship, with a relationship becomes a following and a following creates a brand. Stand out, be a maverick, take on the sales yourself, put the power in your hands, the reward is more profitable and favorable in the end.
For personalized guidance for your business on this topic and others contact us.
- Vincent Calace
Founder & CEO Venture Business Development