A recent BDO retail research survey highlighted how most retailers are bracing for an economic downturn in 2019. There are several macro factors affecting retail in the U.S. However, the reality is a bit more complex. There will be winners and losers, but the players caught in the middle will get squeezed the hardest as competition heats up from high-growth D2C brands.
One interesting snippet from the article is that most retail execs surveyed have de-prioritized investments in the in-store experience. This compares to increased investment in ecommerce and marketing efforts. While digital growth is paramount, the strategy ignores one of the biggest strategic advantages a physical retailer has in their stores. Ironically, many D2C brands expect to open physical stores in 2019. As a result, older retailers with stale in-store experiences will seem even more outdated compared to the fresh, clean and newer store models opening up. Retailers would be wise to close underperforming store locations and invest money in remodels.
