It’s pure-play ecommerce that is facing an apocalypse, not physical retail, says J. Skyler Fernandes, managing director of Cleveland Capital, who formerly headed up Simon Venture Group.
Conversion rates for customers visiting online retail sites are 3 percent, versus 20 percent for those entering stores, he said. Forty percent of merchandise sold by e-tailers is returned, he added. “The conclusion you’d reach from all this is that ecommerce is a tough business and it sucks.”
Instead, the future belongs to omni-channel retail. “Seventy-three percent of customers are omni-channel,” he said. “The line is completely blurring between what is an online sale and what is an in-store sale.”
Mobile commerce is turning into physical retail’s biggest friend, he observed, enabling customers to couple the convenience of technology with the experience of being in a store.
“Seventy-three percent of customers are omni-channel”
Successful retailers of the future will be those who build on that experience, he said, citing the ice boxes in Eddie Bauer where customers can test cold-weather apparel.
Currently retailers are exploring the possibilities of connected cars and homes, 3-D printing, robotics and artificial intelligence.
In the future, we will see more convergence between retail real estate and other uses such as office, residential and entertainment. Even further down the road, shopping center owners might get into the business of owning their tenants and even manufacturing merchandise, he speculated.
"It’s not the end of retail,” he concluded. It’s really the beginning of a new stage in retail.”
By Edmund Mander