Since the financial crisis in 2008, the economy as a whole has sustained a steady rate of job creation at around 180,000 new jobs per month. Despite the strength of the overall economy, however, there is evidence that this growth has not been uniformly distributed across industries. One industry that has been struggling as of late is retail. According to a Credit Suisse report, 2,880 stores have already closed this year to-date with an estimated 8,640 closings by year-end. This has cost 30,000 retail workers their jobs in March alone, which contributed to a decline in job creation during March from the expected rate of 180,000 new jobs to merely 98,000. One explanation for this downturn is overbuilding. Malls added way too many stores in recent years most of which sell the same thing: apparel. The number of malls quadrupled since 1970, while the population has only increased by half that amount. This led to the creation of a bubble, which has now burst. Since many of the struggling retailers are not yet on the verge of bankruptcy, the solution here is to simply decrease the amount of stores open to the prescribed amount and decrease rent.

Another more obvious explanation for the decline in retail is increasing popularity of e-commerce and online-shopping in recent years. It is undeniable that online-shopping is oftentimes more convenient and efficient than driving to a nearby mall or local store. Amazon has taken full advantage of this reality and has seen unprecedented growth as a result. It leads the e-commerce market with 53 percent of sales growth, while the remaining 47 percent is divided among the rest of the industry.

One reason for Amazon’s success is that it has managed to make shopping a more personal experience again through artificial intelligence and data gathering techniques. When Mom-and-Pop stores dominated the retail industry, one-on-one relationships between the provider and customer were easy to foster—the storeowners and employees knew their loyal customers, their preferences, and how they shopped. Once chain stores emerged, it became harder to maintain this close relationship. This demonstrates how e-commerce has been able to use technology to enhance the retail experience, and explains why it has gained popularity.

While it is probable that the rise of e-commerce is a reason why retail sales have diminished, there is no reason to believe it will completely over-run the industry. In class, we discussed some of the benefits online shopping offers in terms of purchasing books, electronics, music, video games etc. As a baseline, online shopping is generally good at providing items that consumers would not mind waiting a few days to receive. There are, however, many goods and services that are not easily transferred through e-commerce mainly due to timing (food), or the consumer’s desire to test/touch/try on the item (s)he is purchasing. For this reason, most Americans still prefer shopping in person 75 percent of the time. This gives experts reason to believe that refocusing on customer shopping experience and the quality of service is the way for retailers to leverage their advantage, and ultimately be able to compete with e-commerce giants such as Amazon. This has given retailers incentive to utilize technology behind the scenes in a way that will improve customer service. The goal is to provide the best of both worlds: a tangible/in person shopping experience, while simultaneously increasing delivery speed, speeding up the supply chain, broadening choice, and customer profiling.


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