Here’s Why Brick and Mortar Retailers Could Be Making A Comeback

So, what is the root cause of the drastic retail downturn we’ve seen in recent years? Many factors have been cited as causes of the so called retail apocalypse. For one, it appears that delayed economic effects from the Great Recession of 2008 could be playing a role.

(Before moving on, a quick note: It’s difficult to touch on all of the complex economic factors affecting the retail industry in a blog post. If you’d like to learn more, the National Retail Federation offers some great resources.)

What Caused The Recent Retail Downturn?

First off, the growth of budget friendly options such as Dollar General and Family Dollar has contributed to the struggles of local retailers. These brands played a key role in allowing consumers to stretch their budgets during some of the worst economic conditions we’ve ever seen, and they’ve been skyrocketing ever since.

More importantly, American consumers just aren’t shopping at brick and mortar retailers as much as they have in the past. This can be seen in the shuttering of countless shopping malls across the United States.

The juggernaut of Amazon, which has become one of the world’s largest online retailers, typically receives most of the blame. Yet, faulting one company for changing an entire industry isn’t entirely fair in this case. In many ways, the shift to online shopping was probably inevitable, as highlighted by the growth of Walmart’s online business.

Mainly built off of technology acquired from Jet.com, the growth of Walmart’s online operation is mirrored by that of Target. In other words, many aspects of brick and mortar retail appear to be shifting to online-delivery-as-a-service models. The good news is that the adoption of new technology doesn’t have to mark the end of traditional retail operations.

It’s Not All Bad News For Retail

Yes, The Great Retail Apocalypse has clearly delivered a major blow to the retail industry. Major U.S. brands like Toys R Us and Payless ShoeSource have been knocked out, and former industry titans like Sears and J.C. Penny are still on the ropes.

Nevertheless, it’s not all bad news for those who still find themselves on the brick and mortar side of retail. The adoption of new technology is helping the physical storefront transform into a fresh experience for customers. From the proof-of-concept for automated storefronts provided by Amazon Go to the widespread application of cost-cutting analytics by numerous companies, retail appears to be undergoing a tech-powered resurgence.

This trend is exactly why we decided to invest in a company called LocateAI last year.

LocateAI: Selecting The Perfect Storefront Location

In the tech-savvy world of online retail, tools powered by data analytics and machine learning are old news. However, smaller retail chains, many ran by local owner-operators, haven’t had access to these powerful business aids until now.

At its core, LocateAI is dedicated to providing its customers with informative insights on which locations could be right for new brick and mortar stores. Their proprietary machine learning algorithm leverages key metrics and customer data to target consumer behavior.

In turn, this provides actionable business intelligence, enabling organizations to optimize the physical location of their retail storefronts. From determining how different stores affect each others sales to determining potentially ideal co-tenants for retailers, LocateAI identifies key success drivers.

LocateAI utilizes a number of cutting edge tools to provide complete insight for retailers, restaurants, developers, and real estate professionals alike. Machine learning is harnessed to forecast revenue figures for potential sites, while key socioeconomic factors are considered to predict consumer behaviors.

Market optimization helps new locations maximize potential revenue while minimizing the likelihood of nearby storefronts cannibalizing existing sales. Best of all, all of this information is visualized through an intuitive interface, making it easier than ever to plan for future locations.

This helps business owners understand what factors could help or hurt the sales numbers associated with a new location. Empowered with this information, brick and mortar retail becomes less of a guessing game and more of an exact science, just as it is for today’s online retail companies.

Real Estate VC @ Second Century Ventures . Former VC @ Plug and Play Ventures, Partnerships @ Kash (acq.), Analyst @ Real Facilities (acq.), Founder StayTO.