Many industry experts projected that the rise of e-commerce would lead to the extinction of brick-and-mortar retail. But that hasn’t happened. Why? Because physical stores combined with other shopping platforms have been found to play an essential role in meeting customer’s multidimensional and dynamic shopping needs.
It’s been proven that brick-and-mortar stores have actually strengthened consumer awareness and loyalty for many brands. But it remains true that e-commerce has had a strong influence on retail industry trends. “C-rated” malls are dying due to e-commerce pressures, losing anchor stores and being burdened with stores that lack freshness and relevant assortments. But best-in-class shopping centers are thriving by adapting to current trends and offering innovative and flexible approaches to shopping. Good examples of this are Tyson’s Corner Mall in Virginia and Beverly Center and Century City in Los Angeles.
Statistics show that, while e-commerce is capturing headlines, 90 percent of all retail sales are transacted by stores and 95 percent of all retail sales are captured by retailers with a brick-and-mortar presence. Per A.T. Kearney, a management consulting firm, “physical stores remain customer’s preferred shopping channel and a place where the most significant consumer and retailer value continues, and will continue, to be created.” When it comes to e-commerce, it has been shown that two-thirds of all customers purchasing online go to a brick-and-mortar store either before or after the transaction.
Millennials are beginning to drive much of today’s retail spend. It is projected that they will spend $1.4 trillion annually by 2020, representing 30 percent of total retail sales. Millennials consume goods and shop the same way they consume media – across platforms and channels. So, for retailers, in addition to their brick-and-mortar presence, it is critical to offer a true multichannel retail experience.
It has been proven over and over that there is a strong correlation between successful brick-and-mortar stores and a successful e-commerce business. Macy’s recently said that when they close a physical store, their online business drops in that trading area. When it comes to buying online, customers are less likely to use a retailer that doesn’t have a physical store in case they want to return an item. Many factors dictate that having a physical location is more important to a successful retailer than ever. To that end, some former online-only retailers like Bonobos and Tuft and Needle are opening brick-and-mortar locations. And so is Amazon.
Smart retailers are bridging the gap between e-commerce and physical stores. When it comes to pricing, it’s important that a retailer’s online and in-store pricing are the same. It avoids customer confusion and lets them shop seamlessly through the various channels. One curious exception to this rule is Barnes and Noble. Their physical stores will not match prices quoted online. As a result, an in-store customer may select an item, look up competitive pricing, and then go home and buy it online. Even worse, when online and in-store prices are not aligned, the customer has no real reason to visit the brick-and-mortar store in the first place.
Today’s consumers, particularly Millennials, value feedback before they shop. They use multiple platforms—including social media—for research. They look up “star” ratings at places like the Apple App Store and Yelp and make purchasing decisions based on others’ feedback. It is critical for today’s retailers to effectively combine social media awareness, e-commerce and brick-and-mortar to deliver a truly seamless, 360-degree omnichannel experience. Especially for the next generation.