Best Buy was written off for dead a few years ago. The company rebounded through sharper pricing, more services, and an increased assortment of products that aren't readily sourced online, such as mobile phones and brown goods.
For customers, the experience of retail shopping retains an edge over the online experience. Shopping remains fundamentally a social experience that people enjoy doing together. Two, customers continue to rely on malls to access services such as nail salons, for purchases that require customization, such as the tailoring of garments, and for entertainment.
For some product categories, retail settings are simply superior. For example, companies who struggle to express important features of their product online — such as sportswear, for which the texture and precise color of fabric is critical — will continue to rely on stores.
Moreover, new retail formats are emerging that are less susceptible to online competition. Brands like Uniqlo, H&M and Zara sell lower-priced products that are often purchased on impulse and do not offer sufficient margin to cover the cost of returns and free shipping that online shoppers demand.
The bottom line: Retail employment will not disappear. It will decline, but stabilize as retailers innovate.
Other voices in the conversation:
- Mark A. Cohen, professor, Columbia Business School: Amazon is unstoppable
- Kirsten Green, founder, Forerunner Ventures: Online shopping is no fun
- Stuart Appelbaum, president, retail workers union: Retail won't die, but it will change
- Oscar Yuan, president, Ipsos Strategy3: Amazon spurns Gucci shows
Joseph Fuller is Professor of Management Practice at Harvard Business School.