Is it a problem with the collapse of 3.1 million stores? Or is it a problem with e-commerce or management?

      In the past five years, there have been many incidents of bankruptcy and transfer, especially the mature development of e-commerce and the boost from the COVID-19 pandemic, physical stores are indeed becoming increasingly depressed. What exactly is the reason why 3.1 million stores collapsed? Is it e-commerce or is it a rising store rent? Let’s explore it together today.

01. Data is just a mirror

      Qichacha data shows that from January to November 2020, a total of 3.01 million self-employed individuals, individual-to-enterprise companies and other entities were revoked and cancelled. This data is caused by the epidemic, but it is not decisive, because the wave of physical stores closures has been on the rise for many years.

      In 2019, international supermarket giant Walmart closed 11 stores in China. By the same year, Walmart had closed 86 stores in China. You should know that Walmart had a law in the world back then. Within a radius of 5 kilometers of Walmart stores, other retail stores had no room for survival.

      Even the former king did not escape the fate of closing stores . Coincidentally, not only Walmart, but also Lianhua Supermarket closed stores in large supermarkets. In 2019, Lianhua Supermarket closed 335 stores in order to solve the crisis of continuous losses. It has suffered serious losses since 2015, and the loss status has continued until the store is closed in 2019.

      There is an article online that the compound closing rate of physical stores in Beijing, Shanghai, Guangzhou and Shenzhen in 2017 reached 100%, which means that the number of stores opened at the beginning of the year and the number of stores closed at the end of the year. No more than 50% of those who are still alive after opening six months, no more than 20% of those who are still alive after opening one year, no more than 5% of those who are still alive after opening two years, and less than 1% of those who are still alive after opening three years .

      The development of things is rising and falling, physical stores are closing down in large numbers, and e-commerce is constantly rising. According to statistics from the China Business Industry Research Institute, as of December 2019, the number of online shopping users in China reached 733 million, accounting for 69.1% of the total number of netizens. E-commerce data in 2019 show that the average annual online shopping amount of Taobao online shopping users exceeds 10,000 yuan.

02. E-commerce is not responsible, management is the foundation

      From data entry, it is the best observation point. In the situation of physical stores, people can easily attribute the reasons to e-commerce, believing that physical stores and e-commerce are binary oppositions, because physical stores are expensive and operating costs are high. The emergence of e-commerce has separated the traffic of physical stores, but in fact, this perception is one-sided.

      On the surface, the situation of physical stores is caused by e-commerce, but it is because its own development mechanism is not mature enough, and it has not quickly catered to the times and updated its sales channels. These are all a problem in the final analysis, that is, management, physical stores are in a management dilemma and lack scientific and detailed management within them . This is particularly prominent in physical stores such as department stores, supermarkets, and clothing.

      In addition to these, the biggest obstacles encountered by physical stores are cost difficulties, such as waste of resources, increased operating costs, greater inventory pressure, double losses of economic resources, fast market demand changes, lack of innovative elements, few new brands, backward sales methods, low efficiency, etc. These are summarized as management issues.

      If there is mature and adaptable management, a complete talent echelon and talent reserve, most of the above problems will be resolved. The reason why the prospects of traditional physical industries are dim is that no one innovates in old things, produces new things, and continues or develops new lives. One thing you must understand is that whether it is physical stores or e-commerce, it is just a sales channel. These are often changing things, but what remains unchanged is the products you sell, your services, your management capabilities, and your business level.

03. Is there still a future for physical stores?

      So will physical stores still have a future? The answer is yes, there will definitely be.

      The physical store will not disappear, it is just upgrading and iteration to appear in the sight of consumers with a better version. Physical and e-commerce, offline and online, will have no boundaries in the future and will be combined into one . Lao Gao once said during a live broadcast that this is a trend, online brands will definitely open physical stores offline, and some offline and powerful old brands are also walking with two legs online and offline.

      It is understood that giants such as Tmall, JD.com, and Xiaomi have opened Tmall stores, JD.com convenience stores, and Xiaomi Home offline. Some even carry out in-depth strategic cooperation with offline supermarkets such as RT-Mart and Yonghui through mergers and acquisitions and investments. Just imagine, if there is no prospect for physical stores to develop, will these corporate giants open physical stores offline?

      Definitely not, because physical stores require venues, decorations, labor, air conditioning, and a series of costs and resources are required. However, these giants still have their physical stores, which means that physical stores are optimistic, and the country will not be able to let the real economy go bankrupt.

      Socialization and communication are the eternal needs and pursuits of human nature. Offline physical stores are a space for socialization and communication. Physical stores no longer simply sell goods, but become a carrying space for sale by the way. In this way, physical stores are just richer in content, not only will they not disappear, but they will also have a better future.