Every day we get more evidence of the contraction of retail businesses. The biggest and most surprising to me is Walmart. But Walmart explains their behavior as a switch to online selling.
Walmart is reducing its number of stores most in urban areas where wages are going up and Target is making inroads.
Unions in big cities create hostility toward Walmart. That can’t make management feel good about serving the customers in areas where they are abused. Also that hostility almost certainly crosses many expansion plans off the list. It affects Target too. Unions are bad for low income people and minorities. The Walmart in Oakland closed because of the local minimum wage laws.
The real problems of traditional retail stores are the long tail, delivery and parking.
The long tail is important. I looked at my most recent ten orders from Amazon. Every one was for an ordinary item that I couldn’t find in a local retail store. ‘Long tail’ refers to the distribution of goods and services when laid out on a horizontal grid with shopping volume. There are all the goods commonly stocked in retail because they are frequently bought. They warrant shelf space.
The ‘long tail’ refers to the many products that move off the shelves slowly and are not carried in retail stores of finite footage. Such as dense urban areas. 'Long tail' comes from the graph of the sales volume curve where it is low and very low.
The next iteration of retail will have screens everywhere with all the long tail items that can be delivered in hours, with complete descriptions on the screen. Retail must deal with this significant force in their business. People now prefer not to waste a trip to shop.
In urban areas that gets to the next issue. Parking. Every retail business knows how much parking is needed for the business to function. I’ve watched Trader Joes, Home Depot and Fry’s, the leading computer supply store, turn down great locations because the local political idiots wouldn’t wouldn’t give them enough adjacent parking.
Retailers will have to band together to educate urban politicians about the consequent loss of business.
Lastly, online businesses have a great advantage in delivery. Delivery to the home is hard to beat. The only answer to this is to make a retail visit a theatrical event that makes the trip to the store worthwhile. McDonald's did a little of this with children’s play structures, but that is trivial compared to what is needed.
Retail has a long downhill future. With minimum wage laws proliferating because of union support and the business ignorance of Lefties, the downhill slope is steeper than ever.