Amazon effect: Brick & mortar won't be replaced, but presence will shrink, Michael Rubin says
Michael Rubin, Fanatics Executive Chairman and co-owner of the New Jersey Devils and Philadelphia 76ers, says the licensed sports merchandise retailer Fanatics’ direct to consumer business model is largely driven by its e-commerce focus, telling the FOX Business Network’s Maria Bartiromo,“Our business today, it’s mostly online. It’s about, of our direct to consumer business, about 90% online and then 10% is operating the stadium, the stores at the stadiums, so we have about 40 different stadium stores that we operate.”
Rubin weighed in on how the overall growth of e-commerce will continue to have an impact on brick-and-mortar over the next decade.
“The brick-and-mortar business, it’s going to be here in 10 years, but it’s going to look very different,” Rubin said on Mornings with Maria.
Rubin predicts a decline in brick-and-mortar retail over the next 10 years, “I think e-commerce is becoming so important, it’s becoming so much bigger [than] the actual numbers are. In ten years from now, brick-and-mortar retail will be smaller, there will be winners and losers, but brick-and-mortar retail will be smaller.” He continued, “I think you could see 30% less retail locations in a decade from now.”
Rising costs are also a factor weighing on the outlook for brick-and-mortar businesses.
“Meanwhile, you’ve got increases in labor so the business model of brick-and-mortar retail is definitely difficult. It doesn’t mean it’s going away, but it’s going to look very different.”
Brick-and-mortar retailers need to differentiate themselves to survive.
“If you’re a brick-and-mortar retailer selling the same merchandise that other people sell, you’re going to be killed by Amazon (NASDAQ:AMZN) and Alibaba (NYSE:BABA), you need to be different.”
