2017 was the year of the so-called “Retail Apocalypse. ” If the common wisdom was to be believed, stores were closing at a record pace, brands were dying or being subsumed by other, stronger players, and every retailer was terrified that consumers’ digital shopping habits would leave them in the dust.

But in 2018, retailers are getting over their panic that giant eComm players like Amazon will disintermediate their brands into oblivion. RSR can see this in a year-over-year comparison of how retailers rate the importance of the selling channels. While one-half of retailers in our surveys have consistently have told us that they believe that “stores PLUS digital ” is the key to the future, in 2017 the other half favored digital over stores (34% compared to only 11%) as “more important “. This year that has flipped to stores over digital (29% vs. 20%).

Nonetheless, most in the industry think that even conservative retailers must inevitably move to a “stores + digital ” strategy if they want to continue to connect to consumers and how they shop. There’s just no stopping that train. The inevitability of that is why we at RSR don’t believe in the so-called “retail apocalypse “. In fact, what’s happening now should be called “Retail’s Renaissance “.

That is what Deloitte Consulting’s Preeti Pincha called the current state of Retail in a presentation she made at the Pitney Bowes‘ (R)evolution conference in May. In her talk, she made these points:

• In the USA, unemployment is near an all-time low,
• Customer confidence is high,
• The stock market is higher,
• And consumer debt is low!
• All of these point to a healthy consumer economy, and sure enough, last year the Retail industry grew faster than the GDP, 3.5% vs. 2.3%.

So what’s the problem? There’s a quote that I’ve been using in my speeches lately, from science fiction author William Gibson, that “the future is already here – it’s just not evenly distributed. ” According to Deloitte’s Pincha, the retail market is bifurcating, with most new discretionary income going to the upper 20% of wage earners. And for the lower 40%? Well, for them items that used to be discretionary – for example, smart mobile phones and expensive mobile network access contracts – are now perceived as non-discretionary, adding to their already burdened budgets. Retailers that have a “balanced ” value offering (a little something for everyone) are the most constrained in this environment (and yes, those retailers are closing stores). But “price based ” retailers are seeing good growth and are opening stores, and “premier ” retailers are seeing better growth and are also opening stores. (Editor’s Note: check out the Deloitte Insights report, The Great Retail Bifurcation, for more details).

But the Deloitte Insights report also points out that higher-end consumers shop more in the digital domain, while lower-end consumers tend to favor the stores. In the Retail Renaissance, “digital ” is to society what the printing press was to the European 14^th Century Cultural Renaissance. Consumers who don’t use digital to enrich their lives will be like people who couldn’t read in the 1500’s.

From our point of view, retailers can’t take any solace in the fact that today a preference towards digital shopping happens mostly in the upper echelons of our consumer culture. No retailer can afford to take its time any more when it comes to interlacing the digital and the physical together in the store. That became clear when Amazon bought Whole Foods, and other grocers – never anyone’s pick to be first on the block with the latest and greatest in technology – surely took notice.

In this week’s Retail Paradox Weekly, my RSR partner Paula discusses how the giant Chinese eCommerce retailer Alibaba is making its move into physical stores, an action similar – but even more aggressive – than Amazon’s foray into grocery stores. The point in both cases is this: both Amazon and Alibaba come into the market with a digital-first strategy, not a store-first one, and they already have a full suite of capabilities to weave into the store experience. How different that is than what we have seen from store-based retailers in the last ten years!

For traditional retailers, investments in digital are made very cautiously and in serial fashion. Experimentation is rare, and retailers hate to “waste ” money – so if they start something, they have an expectation that it will work, and that means that they are probably not breaking any new ground. And then there’s “the past “, which now feels more like a boat anchor than a legacy. In our forthcoming study on the state of eCommerce in Retail, we learn that the top inhibitors that retailers identify standing in the way of taking advantage of the digital domain are all too familiar: the existing technology infrastructure, lack of capital, and organizational resistance (in that order). Amazon and Alibaba don’t have those problems to contend with.

So… the future is indeed already here – but it is not evenly distributed. Consumers are already living in the digital/physical world, irrespective of national borders, supply chains, or physical store walls. This renaissance is (as Pitney Bowes aptly named its conference) truly a (R)evolution. It even affects us at RSR; our eCommerce studies are starting to have an element of “the store ” in them, and our “store ” studies are starting to bleed into eCommerce. It’s a reflection of reality.