On today’s show we’re talking about how shopping has changed. But not just shopping in general. We’re talking about how my shopping has changed forever.
Last week, my wife and I were on vacation. We chartered a boat on an inland waterway in central Ontario. We were going through the locks and my wife lost grip of the boat hook and it fell in the water. Normally, a boat hook is a specialized item that you can only find at a marine chandlery. They can be expensive, usually starting at about $75.00. She was pretty upset and was worried that the charter company would charge us a large amount of money to replace the lost boat hook.
So I went on Amazon and found a basic telescoping boat hook of similar quality to the one that now is sitting at the bottom of a lock.
We ordered a replacement for $31.00 and with free shipping it arrived at the charter company before the end of our trip. I solved three problems with that online order.
1) I replaced the lost boat hook
2) I eliminated the fear and uncertainty that my wife was experiencing around the lost boat hook.
3) I saved at least 50% compared with buying from a retail marine chandlery
The owner of the charter company was hugely appreciative that we ordered the replacement. It solved a problem for them and frankly they were surprised to receive an anonymous boat hook in the mail without warning. This is the new world of retail.
If you own a retail store or a chain of stores that offers a variety of products at high margins that are easy to ship without being needed immediately in expensive retail locations, then you’re in big trouble.
There were items that I religiously said I would never buy online. Top of that list was clothing and shoes. I find it difficult to buy shoes that fit. I often will try on a dozen pair of shoes before I even find one that fits. The idea of sending shoes that don’t fit back in the mail seems offensive to me and I won’t do it.
This year, I had a pair of running shoes that had worn out. There is one manufacturer that I can count on to fit my foot. Rather than go to the store and try on running shoes, I decided to try buying online. I ordered the same size from the same manufacturer that I already had. It was a new model, but I reasoned that the sizing should be consistent within the same manufacturer over time. The purchase price online was less than the retail store, and I spent a total of 4 minutes on the transaction. Two days later, the running shoes arrived and I spent less time than it would have taken to drive to the store.
So the emotional obstacle to buying clothing online has largely been overcome, at least in my case. Will I buy a new dress suit online? Probably not. But I would buy a dress shirt online from a brand that I know. I would buy somethings, but not all things. I maybe would buy half of my clothing online in the future.
If you’re a clothing retailer and you lose 50% of your sales to people like me who now buy things online, you’re going to suffer. In fact, you’re probably not going to survive financially. Is retail dead? No. But how many retailers can survive a 50% drop in sales volume? Those that remain will thrive, but only once the industry has shrunk enough to allow those remaining to survive.
As real estate investors we need to pay attention to the changing landscape of our communities. If the smaller family run retail businesses die off as they seem to be doing, who will occupy all those retail store fronts?
The change in retail will change the flow of traffic in the community. It will change how people choose to live in a particular location. They want amenities nearby that they care about. They definitely don’t want vacant abandoned storefronts