Bracing for Change

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These days the news of retailers closing stores is becoming as common and uncomfortable as a Trump insult, a baffling Kanye Tweet, or a Kardashian photo opp. They seem to happen every time we turn on the TV or open a Web page but there's no way to stop them.

These days the news of retailers closing stores is becoming as common and uncomfortable as a Trump insult, a baffling Kanye Tweet, or a Kardashian photo opp. They seem to happen every time we turn on the TV or open a Web page but there's no way to stop them.

The reasons for the rise of the Trump phenomenon or the Kardashian popularity may remain inexplicable, but the ubiquitous store closures aren't as puzzling.

"Declining sales, financial woes, and slow in-store traffic" are reasons heard over and over for the cuts, although everyone is aware of the elephant in the room: the ever-increasing shift to online shopping and the use of mobile devices to shop in stores.
The latest casualty is Sport Authority, which declared bankruptcy last week and announced that it will be closing 140 under-performing stores. Kohl's, Target, Macy's, J.C. Penney, and The Gap also announced closings earlier this year. While Kohl's sales fell nearly 5 percent in the fourth quarter, online sales jumped by 30 percent, and the company said their numbers will only move higher in the foreseeable future, meaning fewer traditional Kohl's stores.

One company is already bracing for the changes in the way consumers shop. Target announced last week its stepping up it plans to spend $1.8 billion this year to beef up its supply network and technology investments. The company also plans to invest between $2 and $2.4 billion every year thereafter on technology.

One of CEO Brian Cornell's top priorities is to improve Target.com as well as the company's mobile shopping app. One of the goals it to improve the company's ability to serve customers who shop online and pick up in the stores. Target reported that 40 percent of online orders picked up in store or shipped from a store were items that were out of stock at Target's main distribution facilities.

Target's not alone. According to a recent poll by the National Retail Federation, only 28 percent of retailers allow customers to buy online and pick up at the stores.

That will likely change. At this year's National Retail Federation's Big Show, omnichannel was top of mind for many retailers and the vendors that serve them. The realization of customers' changing shopping habits is clear: Retailers must enable mobile, use Big Data to engage customers where they are at the moment and when they want to be contacted, and they must link all their experiences seamlessly across multiple channels.

And then the news of store closures will hopefully come to a grinding halt.

EXPERT OPINION
EXPERT OPINION