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Brick-and-mortar stores have fallen on hard times over the past decade. Mega household retailers that once seemed impenetrable are suddenly committing to closing hundreds of locations nationwide. In 2018 alone, Sears, Kmart, Toys ‘R’ Us, Kroger, Abercrombie & Fitch, Foot Locker, J.C. Penney, Sam’s Club, Macy’s, and Gap — all once retail juggernauts — joined an endless list of brick-and-mortar stores that closed down multiple locations or face a complete shutdown.
What was the leading factor that contributed to the closing?
Their inability to embrace E-commerce and digital branding.
The digital marketplace platform is home to nearly 250,000 companies in the U.S. In just the last five years alone, the number of online stores utilizing digital marketing tools and has increased by just over 30%.
The undisputed king of E-commerce, Amazon.com, was named the most valuable company in the world by CNBC back in 2018. Jeff Bezos’ bookstore-turned-diversified marketplace has become the embodiment of modern business. Amazon’s defining characteristics that make it so successful are all embedded in digitization.
While there are plenty of contributing factors that underline a company’s success or failure, entrepreneurs that cross over a digital threshold, are far likelier to experience success with the business ventures than those that don’t. Moreover, 87% of business owners in the U.S. believe that digital transformation gives a company competitive leverage. 30% of business owners are convinced that digitization is essential for survival.
Some companies view digital transformation as costly, unnecessary, time-consuming, and not worth the investment. Other businesses admit to not being able to grasp the complexity of the technology. And while these concerns are understandable, these companies may risk more by not embracing digital tools.
Companies that maintain long-term viability utilize digital technology in almost every corner of their business such as:
Without digital presence, a company can easily lose connection with consumers and be stereotyped as outdated and no longer relevant.
One of the textbook examples of how digital transformation severed the outcomes of two identical competing companies was the Blockbuster/Netflix matchup. Blockbuster video opened in 1985 and instantly became synonymous with video rentals. Their iron-clad success continued into the late 90s. When consumers were replacing video store visits with digital viewing in the early Millennium, Blockbuster started the DVD mail-rental service.
By this time, newcomer Netflix had emerged and was also providing the rent-by-mail service as well. Blockbuster’s CEO John Antioco refused to let go of the brick-and-mortar DVD rental concept. Meanwhile, Netflix was looking beyond the mail-out service and began venturing into video streaming. Once it was apparent that streaming services would cause DVDs to go obsolete, Blockbuster was forced to close its doors. Netflix went on to become a $130 billion company.
These days, brand loyalty is almost non-existent. Companies have to use every tool at their disposal to keep their pulse on the market. The only way to optimize this level of insight is through digital analytics. The arrival of AI and Big data now give marketers the ability to gather enormous sums of data to develop more powerful marketing strategies.
Without digital tools, companies have to work harder, spend more money on research, and execute marketing strategies with limited insights.
Businesses that don’t transition into digital marketplaces are already way behind the competition and are limited in their ability to expand their market. Their best marketing efforts pale in comparison to companies who are building a customer base online.
The largest demographic currently in the workforce are millennials, who are attracted to the workflow, culture, and environment that digital companies provide.
Companies that refuse to acknowledge the need for change have no strategy for future growth. They have no desire to integrate innovation, new ideas, technology, or current trends into the business infrastructure. Their future stability is uncertain at best.
Are you ready to embrace digital transformation in your business? Get started with Thinkzilla today and receive a free consultation. To find out more about our agency, call us at 888-509-1145 or fill out the contact form and we’ll be in touch.