Losers & Winners in Retail Today
New retail categories are emerging as companies like Bed Bath & Beyond, Party City, and others struggle to keep their doors open. The impact of online shopping, the pandemic, and supply chain issues (along with commercial real estate expenses) has seriously affected many brick-and-mortar store brands. Yet, new categories of multi-location retail and service businesses are emerging.
According to Shopify, 61 percent of shoppers say they’ll spend more at a physical location. Some services simply can’t be delivered online — especially those related to health and wellness.
Over the next few weeks, we’ll profile some of the emerging highest-growth multi-location brands and business concepts.
But last year’s list of top retail performers is an interesting amalgam of categories. They included:
- Walmart and Costco (general big box variety)
- Aldi (grocery)
- The Home Depot and IKEA (home improvement and furnishings, with a slant toward DIY)
Clearly, basic needs remain at the forefront of today’s consumer shopping.
As the population ages and becomes more health conscious, multi-location health-related businesses appear. Storefront gyms, spas, and specialty health services are cropping up. The pandemic has created an awareness of self-care, and the aging of our population prompts consumers to seek longevity-related products.
Another trend that has emerged over the past few years is “retail within retail.” We’ve all become accustomed to Starbucks cafes within other types of businesses (hotels, big box stores, etc.), but now smart retailers are looking for other co-location opportunities as a way of reducing rent expenses.
Other brands are looking for product line extensions and new sources of revenue within their storefronts. Cracker Barrel, which has been around since 1969, reported $3B in revenue last year, an increase from 2022. The concept of a gift shop within the roadside restaurant still seems to be paying off. Consumers are accustomed to shopping, dining, and even working out in one location. Lululemon’s Fuel cafe in Chicago is a great example of that.
Some restaurants have cashed in on their brand cache and have expanded into the hotel industry. Taco Bell opened a hotel in Palm Springs, and restauranteur Sam Fox is launching his first celebrity-backed hotel in Phoenix.
That presents new challenges for search, and smart marketers are remembering to claim multiple categories for a multi-purpose business.
For emerging brands, the key to survival appears to be:
- Pacing growth and carefully planning distribution strategy
- Thinking creatively about the omnichannel and multipurpose in-store experience
- Balancing the cost of human labor and automation
- Spending wisely on both mass-marketing and local awareness-building
Of course, staying on top of consumer trends is always essential to retail success. Trends come and go, but basic human needs are timeless.