By Oliver Clarke
As familiar chain stores, such as Abercrombie & Fitch and Wet Seal, close down locations or even file for bankruptcy, some consumers are left wondering about the fate of shopping malls, strip malls, and department stores. While currently e-commerce only represents less than 10% of all retail sales, it is a strong sector, growing at a consistent rate of 15% per year, ever since the US financial crisis. Increasingly, shoppers are turning to the internet to complete transactions that used to be conducted in person. These include books, clothing, household goods, and even groceries and restaurant meal delivery are all arranged online.
This is good news for some; investors who choose e-commerce stocks with revenues over 20% can look forward to continuing growth ahead of the curve. This means shoppers can continue to enjoy competitive pricing and increased convenience. However, it does come with a downside.
While the loss of jobs in traditional department stores has been compensated for by an increase in jobs in the e-commerce sector, these new jobs are not in the same geographical regions as the defunct jobs. Brick and mortar stores have to be spread out, in order to reach the widest customer base, but online retail has no such limitations. Therefore, online retail companies tend to operate in hubs—they reduce overhead by accumulating their work in a few places. If you lose your retail job in a more rural area, the job that opens to replace it may be in New York City or San Francisco. That is too far away for you to take advantage of, if you even have the skillset they desire.
Overall, online shopping does not pose a current threat to brick and mortar stores, especially as they offer free in-store pickup options, as well as both online and in-store deals. These adaptations to the online shopping trend have helped companies with physical retail locations remain relevant. However, as the e-commerce market steadily grows, it is certainly a sector to watch out for.