Inside the Minds of Retail Entrepreneurs
The ill-fated Retail Apocalypse kicked into high gear in 2010 and has been unrelenting ever since. The accelerated pace of retail store closures is due in no small part to the rampant and pervasive effects of the novel coronavirus. The global pandemic brought the most powerful economies to their knees, wiping out trillions of dollars, and maintaining suppressed levels of activity throughout 2020.
Indeed, the confluence of pre-existing ‘conditions’ [the move from land-based retail outlets to e-commerce] has been supercharged by a bolus of steroid-infused coronavirus. What we are now seeing is a mad dash to divest from thousands of retail stores in 2020, in favor of leaner operations with a massive online presence.
Heading into January 2020, few analysts had an inkling of the tsunami that was fast approaching. This geopolitical catastrophe was made infinitely more dangerous, given its unseen, microscopic nature. The airborne virus has infected more than tens of millions of human hosts; it has pervaded every conceivable facet of day-to-day life, and left crushing devastation in its wake.
The December 2019 holiday shopping season in the US was laudable; gains of 3.4% in retail sales were recorded, while online commercial activity recorded an 18.8% increase, year-on-year. Yet, despite the runaway popularity of e-commerce it still made up just 8% of overall retail trading activity at the time.
Fast forward to the present day.
We remain in the midst of the worst health crisis the global economy has witnessed since the Spanish Flu. While the fatality rates are significantly lower than the prior pandemic, the impact on the global economy is crushing. A paradigm shift has occurred in 2020. The numbers of online shoppers have ballooned to record-high levels. Clearly, this is a sign of the times, and SMEs which fail to accede to this new reality do so at their own peril.
The Current Reality of American Retail Operations
Despite the obviousness of the current predicament, many SMEs have not adapted to market conditions. These bricks and mortar operations remain entrenched in an archaic mindset. They believe that land-based operations are most effective at serving their clientele. Reality paints a different picture. Malls, the quintessential staple of American retail commercial activity for many years are failing across the board. There are countless examples of abandoned stores, neglected malls, and shuttered retail commercial operations across every state in the nation.
In 2019, some 8600 stores closed up shop in the US. Credit Suisse conducted a report in 2017 which forecast up to 25% of malls would close between 2017-2022, largely a result of the inability of retail stores to maintain business as usual operations. This is part and parcel of the doom and gloom which is the Retail Apocalypse. It is most prevalent with major American iconic brands such as Macy’s, Sears, JCPenney, Forever 21 Bloomingdale’s, and dozens of others.
It is a sad reality that Americans, and indeed the global retail economy has to contend with. Business Insider reporter Mary Hanbury published a blistering piece titled, ‘50 Haunting Photos of Abandoned Shopping Malls Across America’. It tells the sad story, warts and all.
Fortunately, the Retail Apocalypse can be arrested if innovative techniques are put into place to safeguard the brand names that Americans have come to love and enjoy. At least that’s the opinion of a pair of serial entrepreneurs including Tai Lopez and Alex Mehr. These two celebrity investors are the brains trust behind a Florida-based investment corporation known as REV. Retail E-Commerce Ventures has one overarching objective: ‘Transform Well-Known Distressed Retail Brands into E-Commerce Success Stories’.
Among the many companies that Lopez and Mehr have acquired, include: Modell’s Sporting Goods, The Franklin Mint, Linens N Things, Dressbarn, and Pier 1 Imports. Combined, these companies have generated billions of dollars in revenues pre-acquisition, and the expectation is that they will continue to remain lucrative in the online arena too. By implementing highly effective turnaround strategies, Lopez and Mehr have successfully positioned many popular brands for another shot at success in the e-commerce arena. The Modell’s Sports Goods story is particularly interesting, and worth highlighting.
Modell’s is a 131+ year-old US retail sporting chain. It buckled under the tremendous weight of the retail apocalypse and ultimately had to file for bankruptcy and liquidation, before it was purchased for a sum of $3.64 million by REV. Given the tremendous brand awareness of Modell’s Sporting Goods, and its reputation for high-quality sports merchandise, it was deemed worth saving. That’s precisely what Tai Lopez and Alex Mehr set about doing. They implemented a dramatic turnaround strategy which took the sporting goods giant online and made it accessible to anyone, anywhere. By slashing costs across the board, this sporting goods store became profitable once again.
Many similar examples abound, including the acquisition of Pier 1 Imports for $31 million, and various other company acquisitions for undisclosed sums. All of them are instantly recognizable name brands to a large base of customers. By transitioning to the modern age, and meeting customers where they shop, businesses are now able to transform their operations, maintain market presence, and generate profitable returns over the long run.