The American economy is built on consumers spending money. As a general rule, the retail industry is a good barometer for how well the economy is doing. However, retailers based in malls have had a terrible year. People simply do not go to the mall as much as they used to.
This is especially true for younger people. Instead of going shopping at the mall, many young people would rather research a product on Amazon. Not only is this more convenient, but it is often a way to get a better price as well. With this in mind, it is not surprising that retail mall traffic was down over last year for the holidays.
Can They Survive?
There are numerous companies that are based around being in a mall. Most of these companies are struggling to survive financially with lower mall traffic. The good news is that some of these companies are trying to be proactive in their approach to customers.
In order to drive traffic to the malls, many companies offered hotter deals than the year before. It will be interesting to see if this strategy worked. As the retail environment becomes more competitive, it is going to be hard for these companies to compete on price or convenience.
Offering an item at a lower price is generally a great way to increase store traffic. The problem with this strategy is that it erodes the margins of the business. Without strong margins, companies cannot invest money into other areas of the business.
With the current retail climate, many companies are dealing with lower margins and lower sales. This is a bad spiral that is hard to climb out of. Some companies are hoping that their latest initiatives will result in higher sales and profits.
The early numbers from 2017 show that online retail has improved again over the previous year. This is not a surprise as it is simply much more convenient to shop online than it is to go to a physical store.
Amazon is the biggest company in the online retail space. Over the past decade, the company has grown rapidly and taken away market share from other companies. This year, Amazon is offering a lot of strong deals in order to entice customers to purchase products.