shopping bags standing on cash register in shopping mall, boutique shopping concept
Despite the economy’s growth, hundreds of retail stores and shopping centers are closing. The last two years have been disastrous for the retail industry and it touched everyone – from small shops to large shopping centers. Moreover, more than twice as many boutique retail shops have closed this year compared to last year.

The reality is that the total retail spending continues to grow steadily, despite a slight slowdown. But several trends, including the growth of e-commerce, excess of shopping centers, and the unexpected consequences of the revival of other businesses have led to the fact that boutique retail shops are not doing well. There are several challenges faced by fashion and boutique retail shops. Five of them will be discussed below.

More Interest in Online Shopping

The most common reason for the demise of retail stores is that online shopping eats retail. Between 2010 and 2016, the sales of online e-commerce companies rose from $16 billion to $80 billion. The total revenue last year was about $22 billion. So, you could say that e-commerce companies have grown double in these past six years.

But, the problem of retail is much deeper. Simple return policies made online shopping cheap, light, and risk-free when selling clothes, which is currently the largest category of e-commerce. The success of start-up e-commerce businesses forced retailers in physical stores to offer similar conditions and aims for the same convenience as found online.

Previously, people made several trips to a shop before buying an expensive dress. On each trip, they probably made many other small purchases while they wandered around. But, today, many consumers can ask for and look at all the options, which means that there are fewer walks into shopping centers and fewer random shopping trips in neighboring stores.

The growth of e-commerce not only transfers some purchases to the online network, but also creates new behavioral habits. As a result, consumers gradually see the online network as a good substitute for their local shopping center.

A Shift in Spending: Retail Shops to Food

E-commerce and an overabundance of retail space is the main reason for the closure of thousands of boutique retail stores. The number of clothing stores decreased as consumers spent more on travel and restaurants. Before the Great Recession, people bought a lot of things, such as houses, furniture, cars, and clothes and retail trade grew dramatically in the 1990s. But, much has changed. Clothing costs are declining – its share of total consumer spending in this century was reduced by 20%. Secondly, while wage growth is obviously significant for workers and the economy as a whole, it does not affect companies with low margins that rely on cheap retail stores. Cashiers and sellers are the two largest categories of jobs in the country, employing more than 8 million people and the average income for both professions is less than $25,000 per year. But, recently, new minimum wage laws and a tight labor market have pushed up the wages of the poorest, creating problems for retailers who are already under pressure from the e-commerce industry.

Consumerism

In the modern world, consumers hold great power. Fashion and boutique retailers are forced to be updated on the needs and wants of the customer. The retailers of the boutiques are under pressure to offer similar e-commerce services and it is very difficult to fulfill these services with profit. The most common problem with fashion and boutique retail shops is that the customers demand new products with a huge range of variety, which is not possible all the time. 

Brand Name is Impacted

If the department of supply chain fails to deliver or fulfill thire services, the name of the brand will be affected. Most retailers and fashion brands involve a very long and sensitive supply chain. There are many factors that can impact the brand’s name and quality, for example, if the items are out of stock, people will go to another store.

Sustainability

Famous fashion brands display their sustainability and responsibility. These famous brands need to be seen implementing the sustainability strategy for the betterment of the quality of their products. If the name of a brand is related to any kind of negativity, it will be badly impacted. Customers are well-aware of how fashion and boutique retail shops are operating and the brand should never compromise on these, which is a challenge.

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