Before I start, I want to be clear that we don’t consider anyone a wrongdoer. Every business and consumer represented in this post is working towards their own business or personal goal. I am only creating awareness of the impacts of change. That said…
eCommerce is Growing Rapidly
We are all aware that since the early 2000s the rise of online retail has and continues to negatively impact brick and mortar businesses in a big way. Do you encounter empty storefronts in your community? Our research has shown that if we exclude gas, groceries and restaurant expenses, eCommerce consumes over 50% of our retail spend. But did you know, if we include gas, groceries and restaurants, brick and mortar businesses still capture nearly 90% of the revenue. This also means that consumers are still forced to leave their homes and explore their communities.
With that understanding, what do you think the eCommerce businesses would have in their crosshairs next? Yes,
- Groceries. AmazonFresh, Instacart and Thrive Market are clear examples of eCommerce businesses beginning their invasion on the local grocery space. Order online and receive your groceries freely and conveniently delivered to your home. Hey, we don’t need to get off our couches to shop for groceries anymore?
- Restaurants and Bars. Clearly, consumers here can’t go online. Well, think again. The rapid growth of Blue Apron, Freshly or Hello Fresh indicate otherwise. Amazon’s own initiative to deliver semi-prepared and prepared meals, and Albertson’s acquisition of Plated to bring subscription based home delivery of packaged meals are further confirmation of the trend. Amazon has even begun piloting a liquor delivery service in several metros in the US. Do you still think restaurants and bars are immune from the growth of eCommerce? And it’s just another reason for us to stay within the confines of our homes.
- Gas. Millennials and Gen-Z’ers are already trending towards ride-sharing and eco-friendly transportation. Automobile manufacturers too are investing heavily in developing electric vehicles. When these become mainstream, will there be a need to go out and spend on gas? No. Just plug-in and be done.
Behavior is Shifting
Are we, as human beings, evolving into homebodies? Yes, and I’m going to go off on a tangent here, but I promise to tie it all together.
As a child, I got home from school, grabbed something to eat, finished my homework and was out hanging with friends, by choice. Now, I belong to Generation X. What do kids these days want to do? After all, this is the digital age. The new generations give priority to staying home and playing video games, watching YouTube and staying connected through social media over getting their bikes out and taking a ride around the neighborhood.
I was at a conference last week and one of the speakers was an executive from Alltech who recently surveyed a number of teenagers and asked them if they knew what a grocery store was. And the answer, “yes, it is a place where older people shop, hangout and spend their time”. Where do you think these teenagers are going to get their food? Meal kit services are a 2-billion-dollar industry today and is expected to grow by 25% year-over-year in the next 5 years.
Now, tying things together, eCommerce businesses see this change in behavior and are rightly capitalizing on it. Companies like Walmart and Amazon even have initiatives to deliver directly to your refrigerator.
The Impact
Brick and mortar restaurants are where we go out on date nights. Shopping and hanging out with friends and family keeps us close and connected. eCommerce is a growing trend, and if it continues at this pace, local communities, as we know it, will become obsolete in a very short period of time. Not only are we going to see empty storefronts, we are going to see empty streets. Beyond that, it will have deeper social impacts on our communities. We all know how important relationships and physical connections are to our health and happiness. See the results of the 75-year Harvard study on the subject led by Dr. Robert Waldinger.
Problem or Opportunities Galore?
How are eCommerce businesses successfully converting consumers and perpetuating the behavioral shift? They are putting technology at the forefront of their customer acquisition and retention strategy. They build customer stories and create customer experiences.
It is time for community leaders to invest in technology and build deeper insights into the community’s needs and drive greater engagement.
It is time for local marketers to step up and enable the local businesses with technology and marketing strategies beyond SEO. A consumer searching for shoes online will get to the popular Zappos and Amazon before they see any of the local shoe stores. Find more ways to create awareness to support and grow your communities.
We are working on our own plans to make a difference. How about you?
Other Sources: US Census, Pew Research Center, Bureau of Labor Statistics, Goldman Sachs, V12 Data