What’s Happening to the Retail Industry? (Art and Finance Vlog #22)

How has Amazon changed the game in the retail industry, and how are traditional retailers reacting? Find out here!

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Video and sound editing, graphics: Jocel Angie Ulaye

Music: Ailsean – Chrono Cross ‘Nikki Learns a Song’ http://ocremix.org/remix/OCR00282

Sources:

https://www.wsj.com/articles/retail-store-bubble-has-burst-and-ceos-search-for-answers-1489838402

https://www.bloomberg.com/view/articles/2017-04-17/where-all-that-retail-spending-went

https://finance.yahoo.com/news/millennials-owe-record-amount-debt-122300899.html

https://www.bloomberg.com/news/articles/2017-08-03/retail-shakeout-forces-mall-owners-to-rework-development-plans

https://www.bloomberg.com/graphics/2017-retail-debt/

http://ritholtz.com/2017/03/downsizing-americas-retail-footprint/

http://www.retailprophet.com/retail-economics-boredom/

Script:

You’re watching this vlog on YouTube, so there’s a good chance you buy stuff on Amazon. And why not just buy stuff online? It’s often cheaper and more convenient than going all the way to a mall, which is such a hassle.

(Title)

You probably know where I’m going with this. Malls and brick and mortar retailers are having a difficult time nowadays as consumer behavior is changing. This is especially true in the US, where physical retailers have been closing, leading to larger vacancies in malls.

It’s not just because of Amazon, however, that traditional retail has been struggling. Here is a list of reasons why the face of retail is changing:

1. E-Commerce: Yes, Amazon and its ilk. People are buying online more. Not only that, but they can compare physical prices to often cheaper online prices, such as through their smartphones.

2. Other costs: In the US, a larger share of spending is going to healthcare and financial services. It might be because these services are getting more and more expensive.

3. Malls are boring! There is some evidence that Millenials are spending more on experiences than things. Given that malls and retailers have traditionally had to sell product per square foot of real estate, them spending on intangibles like consumer experience wasn’t high on the list. Now, industry players are trying to develop an online prescence and make store space more interesting.

So what comes next for retail? Some of the newer, digital players have innovated and created physical showrooms for their products, so incumbents have their work cut out for them. Or maybe it won’t be so competitive and Amazon will just take over everything. I can’t imagine that’s a good thing.

Let’s close this short vlog with a comparison of things versus experiences. Would you rather buy more clothing or:

1. Visit Japan, eat at the Gundam café and visit a store that sells creepy dolls.

2. Travel to Spain and watch people jump over charging bulls.

3. Go to Hong Kong and.. uh, have giant ice cream spray water on you.

4. Visit Bohol in the Philippines and eat – yeah, fried worms.

Okay maybe some of you aren’t interested in the last example. But you get the idea. There’s so much to see and do in this world that’s been enabled by modern technology. So why just buy things?

See you next video which is probably an episode of Art and Finance Informal, my live recording series. The next scripted vlog like this will come out next month. If you like what you saw, please do like and subscribe. Thank you!

Ramon Rodrigo Cuenca, CFA
Founder and Director,
Art and Finance

“Clothing or Travel?” (Wacom Cintiq and Clip Studio Paint, 2480 x 2786 px)

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