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Shopping malls and e-commerce—the more things change…

By Steve Simmerman | 11/21/2017 | 2:29 PM

Alibaba to Buy Big Stake in Wal-Mart China Rival

E-commerce giant will pay $2.88 billion for 36% of No. 2 hypermarket operator Sun Art Retail Group

Physical stores serve an indispensable role during the consumer journey, and should be enhanced through data-driven technology and personalized services in the digital economy. — Daniel Zhang, Alibaba chief executive officer.

This story, as reported by the Wall Street Journal today, is telling in many ways. As most of us have read over the past year or so that "retail is dead," it's becoming clear that retail is undergoing a fundamental transformation and will clearly play a role in the "customer journey" for the foreseeable future. Many retailers I talk to report e-comm revenues ranging from 5-10% of total revenues which leaves the balance to be store-based purchases. Even with e-comm revenues growing in a double-digit manner, the store will continue to play a crucial role in the customer journey for the time being. This is likely one of the most disruptive times in retail and one of the most magnificent in terms of innovation! 

Sure, the emergence of the shopping mall transformed retail, but nowhere near the scale of the global e-comm phenomenon! The history and development of the mall are well documented in a research paper written in 1991 titled "A Brief History of the Mall" by Richard A. Feinberg, Purdue University and Jennifer Meoli, Indiana University of Pennsylvania (http://www.acrwebsite.org/search/view-conference-proceedings.aspx?Id=7196). As Feinberg and Meoli cited: 

Shopping malls didn't just happen. They are not the result of wise planners deciding that suburban people, having no social life and stimulation, needed a place to go (Bombeck, 1985). The mall was originally conceived of as a community center where people would converge for shopping, cultural activity, and social interaction (Gruen & Smith, 1960). It is safe to say that the mall has achieved and surpassed those early expectations. In today's consumer culture, the mall is the center of the universe.

As global leaders like Amazon and Alibaba continue to unfold their strategies, including the use of brick & mortar outlets, it will be interesting to read 26 years from now what the retail landscape will look like. Will the architects at Alibaba and Amazon prove to be "wise planners"? Will the digital e-comm experience be the "center of the universe"? Many would argue that the web is already the "community center where people would converge for shopping, cultural activity, and social interaction." The role of the physical store and malls will continue to evolve. It's clear that stores of the future will be nothing like stores of the past. It happened to main street stores with the emergence of the mall, let's see how the digital retail world will help transform the physical retail world. Your thoughts?

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About Steve Simmerman

Steve Simmerman

Steve Simmerman is a Senior Director with JDA. Simmerman has more than 25 years of experience in the supply chain industry including software, consulting and material handling. He has focused his efforts on working with clients to achieve high performance supply chain results through partnerships and creative solutions. He is a member of CSCMP, WERC, and MHIA and is a regular contributor to several industry publications and events. Simmerman holds his undergraduate and MBA degrees from The University of Notre Dame.



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