The first half of 2023 has passed, and the decay of physical stores is worrying. Many people blame the closure of physical stores on rising rents and the impact of e-commerce. However, these two factors are only secondary reasons for brick-and-mortar store closures.
On the one hand, over the past decade, the rent of shops in various cities has been rising, which has put huge cost pressure on physical stores. Especially when the economic cycle is down, physical stores bear such heavy rental pressure, and the result is that the loss is serious and they can only close.
On the other hand, the impact of e-commerce on physical stores is also obvious. Many brick-and-mortar store owners said that some of their business was stolen by e-commerce. After experiencing the epidemic, people have gradually developed the habit of online shopping and reduced the number of purchases in physical stores. At the same time, e-commerce sells goods that are cheap and can be delivered to their doors, which are loved by young people.
Although rising rents and the impact of e-commerce are one of the reasons for the closure of physical stores, they are not the main factors. Rents have been rising, but they haven't led to a large number of brick-and-mortar store closures. At the same time, e-commerce platforms are also facing problems such as unsatisfactory performance and layoffs.
There are two main reasons for the closure of physical stores: First, the competition in the same industry is becoming increasingly intense. Fierce competition across industries has led to overcapacity in traditional industries, with many brick-and-mortar stores closing or reopening. Business is getting harder and harder to do.
Second, consumer demand is shrinking. After experiencing the pandemic, many people have lost their incomes or lost their jobs, lowering their expectations for future income growth. As a result, people reduce unnecessary consumer spending and put the saved money in the bank to cope with possible unemployment, illness and other unexpected situations. The entire consumer market is shrinking, which is the root cause of the mass closure of physical stores.
In summary, rising rents and the impact of e-commerce are only secondary reasons for the closure of physical stores. The main reason is the shrinking consumer demand of the domestic people and the fierce competition in the same industry, which has led to the closure or reopening of physical stores. Therefore, physical stores should fundamentally think about how to adapt to market changes and enhance competitiveness in order to survive in the fierce business competition.
