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That is what you will be seeing more and more on the windows of shops in smaller cities. On September 24th, the I&O research desk presented the numbers of buying (online vs. offline) within the Netherlands. This research showed that non-food shops are disappearing in small cities in the Netherlands (<40.000 inhabitants). This is a huge problem for shops in those cities, which have to close their doors one by one because of the decline of customers. For example, small cities with less than 10.000 inhabitants experienced a 23% drop of shops, which narrowed shops down to almost only food shops and occasionally a Kruidvat or a Blokker. On the other hand, supermarkets keep experiencing a growth: from 6% in large cities to 12% in smaller cities (I&O research, 2015).
The biggest reason for the decline is of course the fact that more and more people are buying on internet. Where 42% of the Dutch had never bought anything online in 2010, this year the number was 17% (I&O research, 2015). This percentage will probably keep on declining.
I&O researched the influence of online shops on the brick-and-mortar shops and concluded that around 40% of the participants explained that their spending in offline shops declined due to buying online and that they buy something online between 1-3 times per month. To measure the influence per sector, a useful indication is the ‘binding percentage’ (Van der Wal, 2015). This percentage shows the part of the spending that is done in a local store. The result showed that especially clothing, shoes and electronics were bought online instead of a physical store.
The food industry does not yet experience the effect of online purchases that much. Food is usually still bought close-by. The binding percentage of food usually is very high, especially in the smaller cities. This is not only due to the fact that it is easy to shop at a near-by supermarket, but for a lot of people in smaller towns, this is also a social encounter.
It is very hard for physical stores to do something about this problem. We have seen many companies falling down because of the shift. Physical stores could think about hiring smaller space (less shelf space offline, and investing online), open only in the weekends (this is a short tail effect, 80% of the revenue is made during the weekend) or participate in an online platform. As platforms are really starting to take over the internet shopping experience, this can really benefit retailers.
Do you think retailers in smaller cities have any chance of surviving? And if yes, what should they do?
I&O Research (2015) Kijken, kijken naar kopen: hoofdrapport [online]. Available at: http://www.ioresearch.nl/Portals/0/Koopstromenonderzoek_Oost-Nederland2015_hoofdrapport.pdf,
Wal, L. van der (2015) Retail vacancy in inner cities: The importance of area and object characteristics [online]. Available at: http://repository.tudelft.nl/view/ir/uuid:b3e5b812-fcf8-446d-9656-a5054e424d0c/