The retail industry is transforming, but not the way you think it is

A major shift is underway in the retail industry, but it may not be the one you think.

Goldman Sachs’ global cohead of consumer retail and healthcare banking, Kathy Elsesser, described the impacts of e-commerce on the sector in a company podcast released Wednesday.

She said those impacts were significant yet often misunderstood.

“I recall about five or six years ago being on an internet conference where there was a lot of casually dressed entrepreneurs wondering why I possibly would run the global-retail group at Goldman Sachs,” Elsesser said.

The implication was that the retail industry was in decline as e-commerce took over.

But, Elsesser said, “I don’t think retail is on the way out.”

The real change underway, in her view, is that the retail and e-commerce industries are converging — and creating more of a focus on what customers want versus which channels they will use to get it.

“So it’s no longer, ‘Where do I buy it?’ It’s about, ‘I just want to buy it, and I want to do it any way that I want,'” Elsesser said.

Every traditional retailer now has web and mobile offerings, while many e-commerce companies, like Amazon, Warby Parker, and Bonobos, are opening brick-and-mortar shops.

Elsesser acknowledged that the retail model needed to evolve. She said the internet had boosted the level of engagement and convenience that consumers expect.

“E-commerce has completely changed the way that consumers interact with products and vice versa,” Elsesser said.

She continued:

A lot of manufacturers always thought about the product and having the best product. Now, you still need to have the best product, but now you also need to find the best way to engage with your end user. And for some companies, the end user was never a part of the formula.

[Now] the customer is really the center of all of those discussions. And what the consumers want is really paramount. So I think that’s probably the most interesting shift that’s taking place.

Her point is simply that that doesn’t spell the end for retail.