Estimates suggest that 15-30 percent of shopping malls will close in the coming years. This isn't a surprise, since foot traffic dropped 50 percent from 2010 to 2013. CNN Money reports that a record 8,600-plus stores are estimated to close in the U.S. this year.
But is that the whole story? It's a seismic shift, but what opportunities are being unearthed here?
The answer lies in realizing that consumers are now in control of the customer journey. As a result, major retail brands such as Apple, Calvin Klein, Microsoft, Nike, The North Face, and many others have positioned themselves to occupy online marketplaces such as Google Shopping.
Since the customer journey is now driven by user intent, search represents the next blue ocean for retailers.
The rise of e-commerce
Brick-and-mortar's losses may very well be e-commerce's gains. E-commerce continues to grow strongly, recording $394.9 billion in 2016. That's a year-over-year gain of 15 percent, according to the US Census Bureau.
Analysts predict that U.S. e-commerce spend will grow to as much as $632 billion by 2020. Interestingly, only eight percent of all transactions today occur via e-commerce. This means that despite the headlines, people are still shopping in stores for different reasons.
Why is this important?
Still, we're seeing enormous growth in e-commerce, as exemplified by Google Shopping. Search advertising for retail accounted for 43 percent of search advertising clicks in 2016. Google Shopping's clicks on mobile rose 162 percent year-over-year, and its revenue grew 52 percent year-over-year in 2016.
This search-based brand of advertising is so powerful that Amazon itself is currently exploring its options for search ads, while mobile giant Apple is growing its own search ads strategy for the App Store.
There's no longer a neat-and-tidy sales funnel to march customers into traditional awareness, consideration, and purchase stages.
Recent studies say people interact with their phones 13 times per hour. That's why Shopify--arguably the ideal choice for small and boutique businesses due to its mobile support--has added its own full-featured app store in addition to its other services.
But while people are on their phones more frequently, they're less likely to be receptive to inadequate or irrelevant advertising--one in five smartphone users used an ad blocker last year, up 90 percent from the previous year. If you can't reach your target audience, you can't sell. (And if you can't sell, your store may end up being another casualty of the retailpocalypse.)
This is where the power of search comes into play. It's inherently driven by customer intent, meaning that customers making specific searches are actively looking for results that are relevant to their search. Consumers are tuning out unwanted ads--yet Google notes that four out of five consumers actually want search ads customized to their city and ZIP code.
Google has also found that 76 percent of all consumers who run "near me" queries with mobile search visit a storefront within 24 hours--and 28 percent of them make a purchase. That's the kind of foot traffic that results in more conversions and sales, because it's driven by actual intent--the same intent that drove them to perform a search in the first place.
How do I win at Google Shopping?
While Google Shopping still absolutely offers huge upside for all digital retailers, it's also an increasingly competitive space.
It's important to get details like your product images right--that's what dynamic image management systems like Cloudinary are for--but there's a big-picture issue here. To outpace your competitors, you need next-generation technology that can keep up with digital's biggest challenge--and its biggest opportunity--data.
In digital retail, there's an incredible amount of data to deal with, including sales figures, pricing ,and product details (men's shirts come in large, extra large, blue, red, cotton, polyester and so on). Having your team individually manage ads and ad budgets for every single product down to the stock-keeping unit level will help them unlock significant gains.
Why? Because this specific, granular approach to managing ads empowers them to:
- Spend more ad budget on high-margin stock-keeping units, driving more traffic and more sales.
- Spend less ad budget on low-margin products that won't convert to significant profits.
The retailpocalypse isn't necessarily a clear indicator of the state of retail at-large. What's happening isn't gloom and doom, but rather, a powerful change in this space. It's a real opportunity for smart retail leaders who can recognize and capitalize on one of the single most important shifts in the market in years.