Do not count brick-and-mortar stores.
Although clicks aren’t yet overtaking bricks in total retail sales it is true that e-commerce has fundamentally altered consumer behavior, and raised their expectations for customer service.
According to the U.S. Department of Commerce , ecommerce still accounts for just 8.9% of total retail sales in 2017. E-commerce is having a significant impact on the wider retail market, as Etsy and Amazon.com are examples.
This impact has multiple dimensions: Online retailers are gaining market share, while brick-and-mortar stores are being pushed to innovate and transform for the digital age. People who think brick-and-mortar stores are in decline are not seeing the larger picture. Brick-and-mortar retail is changing to adapt to market changes.
It’s evident that e-commerce is changing the face of retail by allowing many players to open brick-and-mortar shops (think Amazon Go), and it’s clear that there’s increasing competition.
How brick-and-mortar retail can still deliver for customers
Let’s not forget that brick-and-mortar retail continues to be popular with customers in large numbers.
This is because brick-and-mortar stores still offer a lot to customers. Customers still enjoy positive experiences when shopping in-store, from convenience and gratification to inspiration as well as the special feeling of having a product in your hands.
Brick-and-mortar stores are implementing digital transformation strategies to enhance their in-store experience. It’s clear that brick-and mortar retailers are trying to compete with online retailers such as Target and Walmart by offering same-day delivery and in store pickup for online orders.
Online retailers are also beginning to recognize brick-and-mortar shops as a new channel for marketing. This is because it offers lower customer acquisition costs, while digital marketing costs keep rising. To stay competitive, these merchants that were previously solely digital are starting to establish brick-and-mortar locations.
This is because both brick-and-mortar and online retailers have embraced omnichannel strategies to reach customers wherever they are. Retailers on both sides embrace connected devices and in-app purchases as the customer journey no longer revolves around Main Street shops or malls.
Retailers are adapting to technology’s changing customer habits and using brick-and-mortar shops as an additional tool in their toolbox.
The Future of Brick-and-Mortar Retail: Experts weigh in
What are the thoughts and opinions of the retailers in this space about the future brick-and-mortar retailing?
They offer a variety of strategies that will allow both online and physical retailers to prosper as the industry changes.
Mikhail Damiani (CEO of Blue Bite) shared his belief that retailers need to provide customers with a more seamless shopping experience by making better use of mobile data. Retailers need to make the most of the data that is flowing into their loyalty programs and CRM systems.
Retailers will have to adapt, given that most people spend their time on their phones consuming media and communicating with brands. This will mean fewer fancy displays and digital screens shouting at consumers and more chances for people to interact with the physical space using the phone as a remote control .” – Mikhail Damiani CEO, Blue Bite
Robin Scott, director of Silicon Dales shared his belief that brick-and-mortar stores will offer upselling opportunities and cross-selling opportunities to retailers beyond their role as an online order collection point. He predicted that same-day shipping will be more common.
Online offerings will be a necessity for brick-and-mortar shops. If you sell online and have a brick-and mortar outlet, you’ll likely offer same-day shipping. This will likely happen through a service provider. There are a few players in the space like Uber .” — Robin Scott Director, Silicon Dales
Jordan Ekers, chief customer officer, and co-founder of Nudge rewards believes retailers should not abandon in-store customer experiences. Many upwardly mobile millennials still want these in-person experiences as part their shopping experiences. This is supported by data. Two thirds of millennials visit stores each week and are looking for the human side to the brand. Ekers offered a positive view on how brick-and mortar retail can use both digital and in-store resources to deliver better results for customers.
“Brick-and-mortar isn’t dying, it’s evolving. To increase brand loyalty and convert more customers, leading retailers are improving the in-store experience. The biggest challenge in an omnichannel world .” is to remove friction between online and offline experiences Nudge Reward
Retailers must adapt to changing consumer behavior
While brick-and-mortar retail is rapidly changing, brands are striving to keep up with market changes. Brands are embracing digital transformation at an alarming rate due to new technologies and changing consumer expectations. Good news: Many retailers are succeeding in this task.
Forever 21 Files Bankruptcy to Close Up To 178 Stores
Forever 21 , a fashion chain, has filed for Chapter 11 bankruptcy protection. The Los Angeles-based privately owned company said Sunday that it would close up to 178 U.S. stores. According to bankruptcy filings, the company owns approximately 800 stores worldwide, with more than 500 in the U.S. Forever 21 stated that it will focus on increasing the value of U.S. stores, and close some international locations. Forever 21 will close its majority of European and Asian locations, but will still operate in Mexico and Latin America.
Forever 21 stated in a press release that the company is still deciding which domestic stores would close. This decision will not be finalized until further discussions with landlords. We expect that a substantial number of these stores will continue to operate as normal and we don’t expect to leave any major U.S. markets.
Total retail: I suppose Forever 21 will not last forever. The 1984-founded fast-fashion company enjoyed a surge in popularity among young customers. This popularity increased during the Great Recession when shoppers were looking for bargains. Fast fashion has been in decline over the past year as millennials gravitate to renting and second-hand websites like ThredUP. Forever 21 is also more vulnerable than other retailers due to its large presence in shopping centers, which attract fewer shoppers. Forever 21 joins other well-known retailers who have declared bankruptcy in this year’s list, such as Barneys New York or Diesel USA. Other retailers, such as Payless ShoeSource or Charlotte Russe, have also ceased operation. These numbers are a clear indication of the dire situation facing brick-and-mortar retail outlets. According to Coresight Research , public-traded U.S. retailers have already announced that they will close 8,558 stores this year and open 3,446, as of January. This compares to 5,844 closings and 3,258 new openings for all of 2018. Coresight projects that there could be 12,000 store closings by 2019.