The real reasons for the closure of physical stores and their countermeasures
In the past two years, a large number of physical shops have closed down in major cities in China. Now as long as you walk on the road, you can see the words "Wangpu Rent" everywhere. As a result, many netizens blamed the closure of physical stores on the recurrence of the epidemic, resulting in people now liking to stay at home, fewer people going out to shop, and the flow of people on the street began to decline sharply, which would adversely affect the business of physical stores.
However, we believe that the epidemic will not have a great impact on the large number of physical store closures, and a large number of physical stores will close before the outbreak. Therefore, the real reasons for the large number of physical stores to close down are mainly the following 3, let's understand first:
The first is that it is affected by e-commerce. The reason why e-commerce can win the competition with physical stores has snatched a large part of the market share. Mainly e-commerce sells goods that are cheap, and can be delivered to your door, and even return and exchange. In this case, brick-and-mortar stores will naturally lose out in the competition with e-commerce.
The second is that it is affected by competition in the same industry. As early as the early 90s of last century, because China has just come out of the era of planned economy, few people go to the sea to start a business, coupled with the market demand suddenly burst out, most entrepreneurs as long as they are willing to endure hardships and stand hard work, can succeed.
But now it's different, everyone wants to be the boss, everyone wants to start a business and get rich, and as a result, they can only engage in some traditional industries, so there is fierce competition between peers. Now just walk down the street and there are restaurants, clothing stores, small supermarkets, etc. everywhere. In the case of fierce competition in the same industry, many brick-and-mortar stores will close due to poor management.
The third is that high housing prices have led to the closure of a large number of brick-and-mortar shops. There are two main factors: on the one hand, more than 90% of domestic buyers will now choose to take out loans to buy houses, and in the context of the current high housing prices, buyers' monthly mortgages account for more than 40% of household income, and the remaining disposable income can only maintain daily living expenses, and high housing prices reduce residents' consumption demand.
On the other hand, affected by high housing prices, the rent of shops, office buildings, factories, etc. is constantly rising, which means that a large part of the money earned by physical shops every month has to pay rent, and physical shops are basically working for landlords. Many brick-and-mortar stores have to close down due to high rents.
In fact, the large number of physical stores closing is not due to the repeated epidemic, but to the above three major reasons. However, among these three reasons, real estate is the main culprit, because high housing prices not only seriously weaken the consumption demand of residents, but also lead to high rents of shops, which greatly increases the operating costs of physical shops. Of course, in the face of three reasons such as the impact of e-commerce, high housing prices, and intra-industry competition, physical stores are not without coping strategies.
First of all, physical stores can also realize O2O (online and offline) sales models. Take your business online and compete with e-commerce. Many e-commerce companies now have opened physical stores offline in order to increase the customer experience. Similarly, physical stores can also do business online, and some physical stores can also engage in live broadcasts and short videos to promote their products, so that physical stores can do both offline and online business, and the probability of survival will increase significantly.
In addition, although physical stores cannot compete with e-commerce in terms of commodity prices, they do not even have any advantages compared with their peers. However, brick-and-mortar stores can also explore their own advantages to firmly attract the consumer base and provide customers with good trials, experiences, and after-sales services.
Many customers just like the good experience in physical stores, as well as the advantages of authenticity and after-sales service, so they will choose to shop in physical stores, and these are the shortcomings of e-commerce. In short, brick-and-mortar stores can only survive better if they play their own advantages and compete differently with their e-commerce counterparts.
In modern society, e-commerce and physical stores complement each other, and the reasons for the closure of physical stores are not single, but in any case, through innovation and adaptation, physical stores can still find their own way to survive. So, when you see the words "Wangpu Rent" on the street, you might as well think about it, maybe there is waiting for the next insightful person to create their own business legend.
