What are retailers to do in an environment where costs become a significant driver for market share? Companies that fail to adapt will hurdle towards irrelevance which is why you continue to see many retailers struggle. The recent woes of Macy’s, JCPenney, Sears and others highlight the importance of needing to reduce costs as much as possible. Online merchants have crushed margins for bloated retailers, and we expect this to continue.
An investor recently mentioned to me that they thought I was completely off base to say retailers were struggling. The evidence of this, in their view, was that their local retailer (where they shop at) always seems to have long lines. One retail location does not make for a nationwide trend and we believe you will continue to see a change in how retail is conducted by businesses.
A recent industry publication outlined what they view to be trends that will likely continue in 2019. One excerpt stated:
The “Department Store” Replaced By Marketplaces
Marketplaces will continue to be the new “department store.” 2018 saw the death of the beloved Toys R Us. Sears and JCPenney are having their fair share of struggles as well, despite once being successful forces in retail.
Marketplaces are continuing to thrive. In 2019, we will continue to see marketplaces take over as top revenue drivers in retail versus the traditional department store.
Even though some retailers like Walmart or Target are working to innovate beyond their traditional business models, this won’t be enough to save most department stores from slight (or in some cases, rapid) decline.
Top Predictions For Retail in 2019 [From Leading Industry Experts]
Posted by Tara Johnson on December 6, 2018 in Ecommerce
Companies that failed to adapt will simply fade away. In today’s fast-paced world, that has never been truer. At Destination Wealth Management we analyze trends on a regular basis and invest accordingly based on what we believe macro conditions will be going forward. This is why we have a significant research team, a chief investment strategist, and investment policy committee, and a commitment to conduct original proprietary research. We think it matters in today’s environment.
Any questions about this information, please let us know. Always happy to help.