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Retailers Need to Become Successful on Mobile Platforms or Face Extinction

With JCPenny announcing that they plan to close up to 140 stores it seems fairly apparent that retailers need to be successful on mobile platforms or face extinction. This follows announcements from both Macy’s and Sears in January and are hot on the heels of other retailers calling it quits or shutting down locations in 2016 such as Sports Authority, Aeropostale and Ralph Lauren. JCP has been utilizing mobile app developers to help increase online sales and help create an omnichannel network to better appeal to the changing marketplace, but will it be too little too late?

The Changing Landscape

Mobile has created sweeping changes in the retail marketplace. It’s not just Amazon, or eBay causing headaches for brick-and-mortar operations anymore. Now you have app-first companies that are entering the fray with value propositions built entirely on the mobile platform that are taking away established retail business.

Over the last year users have been spending more time on online-first apps compared to apps developed by brick-and-mortar chains. While growth was experienced by both, online first leaders like Amazon and Jet are simply outpacing the competition primarily due to utilizing better practices for success in the retail app marketplace.

Facing Extinction?

JCPenny’s decision to shut down numerous stores over the next few months will be part of a continuing trend as retailers face the situation of adaptation or extinction. It has become clear that the older business model that focused on locations is not as viable as it once was.

According to commercial real estate research sales per square foot for public retailers is down to $325 on average from $375 in the early 2000s. Department stores and both apparel and sports stores have seen double digit productivity declines.

Certainly the financial crisis that occurred in 2008 played a role in decline as spending habits shifted, but that was coupled with the rise of highly competitive app-first companies that look to provide the same products at lower prices because they have less overhead.

According to Marvin Ellison, JCP’s chairman and chief executive, the closing of stores is part of the process to adjust the business to more effectively compete against online retailers. JCP looks to follow steps taken by retailers such as Walmart and Target that are remaining competitive with their online presence which includes strong mobile apps and mobile-forward thinking.

Retailers need to Adapt

According to a survey in late 2016 of more than 350 global retailers, more than half do not have a digital transformation strategy or are having issues creating and/or implementing one. In this same survey it was noted that compared to 2014 there is a decrease in some retailers’ capability to craft and utilize the omnichannel experience that more and more consumers are expecting.

The advantages brick-and-mortar locations have over online competitors, especially those who are app-first companies, is that they do have a physical presence to work with along with an established brand and name recognition. However they need act fast if they want to stay relevant and competitive.

Mobile-first, omnichannel, and digital marketplace are more than just buzzwords; they are things consumers are now expecting to see in the retail environment. Retailers needs to become successful on mobile platforms or face extinction and that means studying the competition, taking the practices that successful retailers like Walmart and target have used, and crafting a plan that then meets their customers online and mobile needs while also showcasing the advantages they do have with a great omnichannel experience.

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