A TRANSITION YEAR
For nobody, it’s new that the lands scape landscape of the market is radically changing. So far the new Digital word has been developing for years, but now it’s a moment where Digital en E-commerce will take over, putting tons of existing company’s out of business, especially the ones who are trying to adapt to late or are “white heavy elephants “ that don’t have power of quick reaction. Brick and mortar stores and retail are suffering like never before.
Stores like Toys R Us, went bankruptcy closing more than 100 stores along US market, now being rescued by investors, JC Penny also its closing stores and on the brink of bankruptcy with many other actors players with same business model worldwide. In Chile, the stock of Cencosud drops 24.4 % of he’s it’s the value after Goldman Sachs said to their investors to sell the stock.
What was the reason? Not a defined strategy and proper development of E-commerce platforms and a large space for “retail oriented” business. This is the best example of what it's happening today, where is not where are you at now and less who you were on the past, all eyes are a focus on the future.
In Chile, retail sales in 2018 were slammed, where most of their actors' players are suffering in this sector. They blame “Lack lack or Argentineans customers”, among other external factors, when they don’t realize the issue comes from inside, from the old business model that they have. Nobody wants to enter a store anymore full of products that you can’t even be recognized, with walls hanging products (So they can take the most per each square meter), with a boring experience of salespeople under a shelf, who doesn’t know who you are (Today its all about customization), the old concept its DEAD.
Retail and physical stores are facing a huge challenge that’s its to transform they their whole scheme, the structure into a more “Experience-driven” concept store, than a “Sales driven store”. They have to give something more than just a “product”, for that we have the Internet, who can show us thousands of products at the tap of your phone.
As an example, Toys R Us should long time ago, start transforming their stores into “Playgrounds” where kids and their family’s families can go and have a good time, rather than just buy a product and walk through empty and bored aisles. Stores more and more will become “Showrooms” and places to discuss and meeting people whit the same interests, but “Sales on the place” will decline.
The interesting thing about this is that this is a link also with the “Real state” market. Prices of the stores and retails spaces are facing a huge pressure to maintain their “Square meter” price, for a market that needs them less and less. Prices negotiations for rents of stores should maintain or even decline, seeing for the first time in history were a “Real state” product instead rising the price, will be forced to drop it, or at least offer something else than just space.
As this was not enough already for the retail, they are facing “Large spaces” that won't even need anymore. Stores will not have (or will have a very reduced space) to warehousing products inside since mostly all the products will be delivered at your door, being stored on third-party warehouse outside of this these ones.
There is a little uncertainty from the business of the whole worldwide.
Where we are heading it’s clear, the real question is how fast? As we are going now, it’s basically every morning that we woke up.
Daniel, it's one of the first Chilean "Sneaker" entrepreneur, where all he's passion come from.
On March of 2008 -I have left his life in Chile and move to Asia by himself to create Brands & Develop a company who specialized in Sneakers, footwear and Accessories.
Till 2019 Brands & Develop has made products on the sneakers field for more than 4 continents (South America, North America, Europe, and Oceania).