According to a recent forecast from Credit Suisse, some 8,640 brick-and-mortar store fronts may close this year in the U.S. alone. We’re talking mainline brands such as Kmart, JC Penney, The Limited, Macy’s, Payless ShoeSource, Radio Shack, and the list goes on, representative of some 147 million square feet. That’s more than the historical peak of 6,200 storefronts that were a casualty of 2008’s Great Recession. A combination of over-building and, more importantly, consumers’ increasing appetite for e-commerce is creating a retail tumbleweed effect akin to Walmart moving in and blowing out every mom-and-pop operation lined up on Main Street U.S.A.
It begs the question then: what will the future of traditional retail be? While this is a topic we highlighted earlier this year in our first Friday Forecast, that blog focused primarily on department stores. Today we turn our attention to that aforementioned Main Street to ask a similar question about what will occur with all of those vacant retail shells. Surprisingly, we think the answer may be spinning on a turntable near you; that’s right, we’re talking about vinyl records. Last year vinyl record sales reached a 25-year high. More than 32 million albums were sold in 2016, representing a 53% increase in year-over-year sales, a trend that has been gaining steam for 11 consecutive years. Forecasters estimate that number will hit 40 million this year, representing $1 billion in sales. While one might think that the trend has been spurred by some nostalgic yearning to lie back in a field of avocado shag carpet – the better to listen intently – much of the sales activity is occurring among younger consumers who were either raised on CDs, the first advent of digital music, or digital downloads themselves. No, we believe that something else is afoot. In a world of ephemeral virtual experience, the natural human instinct for something deeper and lasting – call it tangible – has taken hold. As one of our teenagers, who is an avid vinyl collector put it, “I like the fact that I can hold an LP in my hands; to examine the artwork and liner notes. It’s something physical. It represents a work of art someone put a lot of effort into.”
What, one might ask, does this instinct have to do with shopping at brick-and-mortar retail? As Joseph Pine II and James H. Gilmore established in their seminal book The Experience Economy: Work Is Theatre & Every Business a Stage, consumers will pay a premium for any product or service that delivers a superior experience. It explains, as they elaborate in their thesis, why one would pay $3 for a cup of coffee at the likes of their local specialty coffee retailer when they can make one at home for mere pennies. And it also explains why Millennials will spend $20 on a vinyl record when they can download their favorite tracks for a $1.29 or less.
Think about it: don’t you long for that independent bookstore of your youth? The one with the open fireplace or potbellied stove and sturdy chairs where you sat pouring over a potential purchase armed with a heightened sense of discovery? While showrooming – that is, the practice of using a smartphone to price shop in the retail aisle – can always undercut any instinct to support local business, consumers should have learned by now that if all they warm is their feet instead of the cash register of the establishment, that all their town will be left with are the ashes of a once vibrant retail core. Which is why your Friday Forecasters are making a bold prediction: that in the wake of all of these closings, that despite the advent of an Amazon buying a Whole Foods, that even though there will be formidable consolidation among a handful of retail behemoths, that one day – and that day may not be too far off – the mom and pop specialty retailer will make a resurgence. Why? Because not every decision can be made in front of a screen. Because experiences are a form of entertainment. And because real, tangible, in-the-flesh experiences possess a kind of authenticity, whether it be tactical or emotional, that the online world simply cannot replicate. These experiences provide a counterbalance to our hyper-distracted lives that are largely devoid of concentration; like that teen listening to her disc crackle and pop, experiences can compel us to stop down and pay attention.Don’t believe us? Well just last week, Bankrate.com released a study that showed Millennials, rather than saving money for a home, were shelling out their earnings to – horror of horrors – eat out and go to bars. In other words, have experiences. The foodie, microbrew and craft cocktail movements are just three examples among many modern-day trends, that revolve around savoring, just as the desire to absorb and interpret the Beatles’ Sgt. Pepper’s Lonely Hearts Club Band in an organic and linear fashion by playing each side from end-to-end is. That’s why we believe that what goes around will indeed come around, eventually, just like a disc spinning on the turntable. While it is true that the growth of ecommerce has a long way to go and there will be plenty of strip malls yet to be stripped bare, the seeds of a one-off retail revolution may sprout from its wake, perhaps limited in scale, but unlimited in how it will manifest new opportunity. After all, the instinct to hunt and gather is not going away, and the result may be an enhanced quality of life – for business, commerce, and overall consumer experience. That’s our hunch – for the record.
Colleen Ferrier is a seasoned direct marketing expert who specializes in guiding integrated direct-to-consumer campaigns with an acute focus on ROI. Her broad experience has included management oversight of marketing, operations, media, and international distribution. The campaigns she has been instrumental in helping lead to success across her 15+ year career include Pillow Pets, Little Giant Ladder, Dream Lites, and Stompeez. Ferrier has a Bachelor of Arts in Communications from Augusta University, Georgia.
Rick Petry is a direct marketing veteran of over 25 years who has been involved with campaigns that have generated over $1 billion in sales. He provides creative services to both B2C and B2B marketing campaigns and recent projects have included Actegy/Revitive, Education Connection, GOLO, Joybird, and OYO/DoubleFlex. The author of over 200 articles on direct marketing best practices, Petry has a Bachelor of Arts in Cinema/Television from the University of Southern California and an MBA with a Concentration in Marketing and Sales from Marylhurst University.