Retail in Asia

In Trends

How Traditional Retailers Can Save Themselves

Non-store retail – catalog shopping and phone ordering, plus door-to-door sales originally, now, increasingly, e-commerce – has been around for a long time (more than 110 years with a longer history of the “traveling salesman” or “drummer” prior to that). But for many years up to the start of the Internet age, store-based retail dominated in the United States.

With e-commerce’s birth in 1995 (the Netscape web browser), there has been a steady shift to non-store channels. In April and May 2016, non-store retail passed 10% of all retail for the first time in at least a century (maybe ever), and the rate of growth is once again accelerating – faster than during the dot-com boom of the late 1990s.

Below is Bloomberg’s analysis, courtesy of CB Insights’ retail innovations newsletter.

Doing some quick math on the current trajectory shown in the chart, non-store retail is adding about 1% point of total retail each year. So 15% by 2020, 20% by 2025, and so on. This is the essence of a major industry segment’s digital transformation and the ramifications are and will continue to be significant.

We already know that customers expect to be served in any channel, on demand, and that immediate fulfillment is their preferred option. One industry commentator referred to younger consumers as wanting the following:

  • Personalized products and services, that can be context specific;
  • Instant Gratification, and;
  • Self service

(Source: CFO)