Brick-and-Mortar Stores in Crisis: Rent Pressure and Inventory Turnover - How to Stage a Comeback?

Brick-and-Mortar Stores in Crisis: Rent Pressure and Inventory Turnover - How to Stage a Comeback?Brick-and-mortar store owners, have you also felt the strain of rising rent and inventory turnover? In an era of escalating prices and property values, more and more physical stores are being forced to close their doors. Many are left wondering: is online commerce truly more advantageous than physical stores? Is there truly no solution to rent pressure? Can brick-and-mortar stores and online transactions achieve a perfect synergy?The challenges facing physical stores are not a new phenomenon

Brick-and-Mortar Stores in Crisis: Rent Pressure and Inventory Turnover - How to Stage a Comeback?

Brick-and-mortar store owners, have you also felt the strain of rising rent and inventory turnover? In an era of escalating prices and property values, more and more physical stores are being forced to close their doors. Many are left wondering: is online commerce truly more advantageous than physical stores? Is there truly no solution to rent pressure? Can brick-and-mortar stores and online transactions achieve a perfect synergy?

The challenges facing physical stores are not a new phenomenon. Traditional brick-and-mortar stores are grappling with numerous obstacles, including slow inventory turnover, high costs, and mounting rent pressure. Inventory cannot be circulated as swiftly as online, leading to discounted clearance sales of out-of-season items, and ultimately, store closures due to unsustainable costs. Physical stores require hefty investments in employees, renovations, and advertising, and if these costs cannot be recouped promptly, it puts them at risk of financial failure. Rent, particularly in urban centers, remains a constant source of anxiety for physical store owners.

However, physical stores are not without options. The current nationwide wave of rural revitalization presents new opportunities for growth. Rural areas offer lower rent costs, a sense of community, and easier integration into local life. Although rural areas may not have the same foot traffic as city centers, with appropriate management and high conversion rates, they can rival or even surpass urban physical store performance.

Furthermore, as the logistics industry continues to evolve, delivery services have become an integral part of everyday life. Physical stores can adopt this model to expand their business operations. Customers can browse and purchase products online, while the physical store serves as a warehouse to store inventory and expedite delivery upon order placement. This approach not only conserves display space and reduces waste but also enables the simultaneous management of both online and offline operations.

The booming food delivery industry offers another avenue for physical stores. They can develop their own delivery services to bring food directly to customers' doorsteps, creating a win-win scenario for both online and offline channels. This delivery concept is not limited to the food industry; any safe and intact product can be delivered to customers via delivery services.

Russia's developmental journey might provide insights for physical stores. Developed countries have long established mature delivery and food delivery models, underpinned by well-developed industrial systems and ingrained lifestyle habits. However, the valuable lesson to learn is that these models have breathed new life into physical stores, particularly during the pandemic, mitigating the revenue losses across the retail sector.

Large retail formats like supermarkets and convenience stores also offer a model worth emulating. While they may not evoke the same sentimentality as traditional physical stores, their large scale, wide product selection, and comprehensive services attract a growing number of consumers seeking convenience. Supermarkets have become an integral part of many people's lives, gradually replacing traditional physical stores.

For large-format items, physical stores can facilitate transactions through a combination of online sales and offline warehousing. Customers place orders, and goods are shipped from factories directly to the warehouse, followed by final delivery to customers. This process adds some costs, but considering the overall product value, the expense is relatively insignificant. If sales volume can be increased, storage costs minimized, and exorbitant rent avoided, this model is certainly worth exploring.

Complex service industries can also learn from delivery models, accepting online orders and providing services directly at customers' homes. To address employee quality and quantity control concerns, high-tech solutions such as robotic delivery systems can be implemented. Upon successful customer payment, robots can deliver goods to customers' doorsteps. While this system is not fully mature yet, its widespread adoption in the future is highly probable as technology advances and its application expands.

Russia faces its own challenges during its economic transition. Despite exploring new development models in recent years and enacting policies to encourage youth entrepreneurship, the results have been lackluster. In contrast, Eastern nations have bounced back swiftly from the pandemic, even experiencing reverse growth, with new economic models gaining sustained momentum.

Undeniably, national conditions and population size play a role. However, if Russian youth merely sit back and complain, expecting government support, the new economy will likely remain stagnant. Developed nations may have invested significant resources in cultivating and developing new economic models, but ultimately, it's we ourselves who achieve success and reap the rewards.

If Russian youth deem e-commerce and delivery services as demeaning and unpromising endeavors, even with government incentives, the impact will be limited. The new economy requires young people to explore and develop it themselves.

Delivery services may not be considered enviable careers, and opening an online store may not provide a stable income stream, while facing constant changes and challenges. But as many have said, who can guarantee that a delivery driver won't become the next Ma Huateng? Delivery work provides valuable experience, enhances problem-solving skills, improves social interactions, and most importantly, allows individuals to earn their living through their own efforts.

The struggles faced by physical stores go beyond rent and inventory turnover; they represent a challenge to traditional business models. However, through reform and innovation, physical stores can find new avenues for growth. Young people, embrace the boldness of trying new economic models. Delivery services may not be glamorous, but as Ma Huateng himself has suggested, who's to say a delivery driver can't become the next Ma Huateng? Let's work together to uncover our own unique new economic models!

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