E-commerce is not the primary cause of offline retail failures

How the mighty have fallen.


Until the rise of e-commerce, traditional street-side retailers dominated the consumer market. Now, these once-mighty retailers are declaring bankruptcies and shutting down their stores. Following this trend, Toys “R” Us, formerly America’s biggest toy retailer, filed for bankruptcy in September 2017 and started closing all of its domestic stores in the summer of 2018.

Although pointing fingers at e-commerce for the deaths of the beloved toy company and other retailers like Sears and Macy’s is tempting, customers should resist jumping to conclusions. The continued successes of vendors such as Target and Walmart wholly debunk the theory that e-commerce is the predominant cause of the downfall of big-name retailers. In order to compete with the higher efficiency and lower prices of online retailers, such as Amazon and eBay, struggling big-box retailers must examine their internal operations and adjust their strategies to cater to a rapidly changing market.

Critically examining Toys “R” Us’s operations reveals glaring issues that leave no wonder about its demise. Most prominently, the huge debt. Toys “R” Us was already struggling to keep afloat in 2005, even before Amazon was a threat. In the company’s bankruptcy filing, the company admitted it had a debt of $5 billion and had been spending $400 million per year to alleviate the deficit. According to CNN Business, this annual payment forced the company to withhold investments in new technology and strategies to make its operations more efficient.

An equal contributor to Toys “R” Us’s failure was the lack of improvements in in-store customer experience. Even Toys “R” Us’s CEO David Brandon acknowledged the importance of improving the customer experience in the bankruptcy filing; he proposed adding playrooms where kids can test toys and host birthday parties. Unfortunately, the company had no funds and time to save Toys “R” Us. In contrast, craft retailer Michaels promptly went on defense when it encountered decreasing store sales in the last few years. Just last year, Michaels introduced free classes and events that were not the usual knitting circles, but included cake decoration and floral arrangement. The classes instantly became popular as numerous craft bloggers raved about them and encouraged their followers to also go.

In order to fully earn the customers’ trust and loyalty, the stores should also consider the performances of their employees. The level of customer satisfaction in store experiences is not only defined by fancy displays or exciting events, but also by treatment from the employees. Online retailers, even with 24/7 customer service and live chats, cannot completely replicate the genuine face-to-face interactions between store employees and customers. Store employees that strive to fulfill the wants of the customers to be heard and understood do more than directing the customers to items that they ask about. The employees also initiate conversations to find out about the customers’ preferences and make better recommendations. If customers have complaints about the store’s system, employees can immediately address the problems. Even the most advanced form of artificial intelligence or chat bots cannot surpass, let alone match, the expertise of a seasoned employee.

However, if the company does not have money to pay adequate wages, adept employees will drift away to find better jobs. Meanwhile, the vacancies may be filled with people who could not care less about the customers’ experiences. Since finding and training new employees can be time-consuming yet futile at times, the companies should invest into their current employees as much as they do into new tools and methods. Making sure that the employees can afford present living standards with their wages and that they feel safe and content at stores will bolster the retail establishments in their competition with the online retailers.

In essence, brick-and-mortar retailers must incorporate efficient methods to their existing systems and entice customers with new, unique offerings to outcompete the speed and cheapness of e-commerce. In the past few years, Target lagged in its performance, which was amplified by its exit from the Canadian market with $5.4 billion in pretax losses. But instead of idly standing by and wallowing in its losses, Target started investing in same-day delivery platforms like Shipt to compete with Amazon’s shipping services. Currently, Target expects to provide the same-day delivery service to 65 percent of U.S. households in 2018 holiday season and has reported its best quarterly sales in 13 years.


Taking one step backward to move two spaces forward should be the new strategy for retailers in the digital era. Instead of lamenting the loss of customers to e-commerce, the retail outlets should reevaluate their current positions and focus on what only they can offer.