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Johannesburg – More retail stores are downsizing and some are even closing as e-commerce becomes more popular among consumers.
According to a research report by the World Economic Forum (Wef) on the future of retail, digital transformation will not only have consequences for physical stores. Other areas which will be impacted include employment levels and the environment.
The report unpacks the impact of these changes over the next decade.
Physical stores
The research suggests there will be a trend toward smaller format stores. This adds pressure to retailers to tailor their product offerings to be “right” for their most valuable shoppers. This also adds pressure to price and promotion strategies so that consumers can see the real value in these offers.
More store closures in the next 10 years will give businesses and local governments opportunities to repurpose the physical spaces into centres for lifestyle and leisure activities, the report stated.
The closure of malls will have an impact on employment levels and in turn disposable income. It will also impact local revenue streams for governments and can potentially create problems such as crime and vandalism.
It is possible that private redevelopment of these retail spaces will take place. The redevelopment of these spaces should be part of a long term economic development strategy and should be in partnership with communities, the report stated.
Technology and the workforce
The use of technology to bring about efficiencies in retail may drive job losses. The closure of physical stores due to e-commerce and the automation of some processes may be among the main contributors.
At the same time, it may introduce new types of workers as stores become less about concluding transactions and more about creating a good customer experience.
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Stores in the future are expected to be staffed with sales associates which may be people, or robots. “Their role will be like a personalised consultant for each customer,” stated the report.
However the rate at which these technological changes are implemented depends on the investments in these technologies.
Environmental impact
As more consumers demand instant delivery, more businesses are focusing on improving convenience for consumers, with consequences for the environment. This is in the form of increased CO2 emissions from more delivery trips.
Also there is a greater demand for cardboard to package delivered items. There is a need to develop environmentally friendly packaging such as biodegradable plastics as well as infrastructure for recycling.
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