) That said, incumbent retailers can’t expect to stay successful by going about business as usual. Based on Forrester Research data and McKinsey analysis. (For instance, despite the e-commerce boom, brick-and-mortar stores should still account for approximately 85 percent of US retail sales in 2025.

While it is true that powerful forces are at work in retail today, we believe their full impact won’t be felt for years. Yet history also offers incumbent retailers some hope: industry shifts have actually tended to unfold slowly-over decades, in most cases-providing time to react. Indeed, six of the ten largest US retailers in 1990 have since fallen from their positions as new winners, such as, Costco, and Walgreens, emerged in their place (Exhibit 1). Each of these shifts unfolded faster than the one that preceded it, and each elevated new companies over incumbents. Within the past century, local corner stores gave way to department stores and supermarkets, then to suburban shopping malls, then to discount chains and big-box retailers. There is historical precedent for this kind of upheaval, which recasts the industry’s winners and losers. Our view is less dramatic, but we do believe that big changes are inevitable and that retailers must act now to win in the long term. Some predict that retail will change more in the next five years than it has over the past century and that the extinction of brick-and-mortar stores isn’t far off. These shifts have led a number of industry observers to forecast the end of retail as we know it. The way that consumers make purchasing decisions has dramatically altered: they stand in stores, using their smartphones to compare prices and product reviews family and friends instantly weigh in on shopping decisions via social media and when they’re ready to buy, an ever-growing list of online retailers deliver products directly to them, sometimes on the same day. The North American retail landscape looks quite different today than it did even ten years ago.

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