The changes in retail consumer buying behavior (especially the growth of online retail) have been well documented. Buying online creates a more efficient process for consumers in many ways, and allows retailers to achieve cost savings to both increase profits and pass savings on to their customers. And when established companies like Toys R Us close all of their stores, new stories about the death of brick and mortar come out.
But in-store shopping has not died. In fact, as of April, new retail stores in the United States showed a net gain of 3,000 openings. E-commerce reached a 9% share of all retail purchases in the U.S. in 2017, a figure expected to reach 12.4% in 2020, showing that even in a few years in-store retail will still account for over 85% of sales. Besides having a strong omni-channel strategy, the physical stores that survive and thrive in this environment will be the ones that innovate and embrace new technologies to provide the best shopper experience.
Embracing The Right Inefficiencies
Streamlining in-store shopping with the intention to compete solely with the efficiency of online retail presents a no-win scenario for brick and mortar stores. No matter how clean the lines or noticeable the displays, a store cannot beat the convenience of sitting on the computer, looking up and comparing items, then purchasing them. The store can become more efficient and can make shopping easier by using displays and aisle arrangements to group items together in ways that make sense. It cannot, however, fully replicate or match the ease of the online shopping experience.
Still, there are areas in which online retail can’t be as competitive. Retail stores can employ salespeople to demonstrate products and direct shoppers. They provide a social experience for shoppers that no website can match, no matter how sophisticated the chat option on its website. These pieces are decidedly less efficient than a website that lets someone target what he or she needs and buy with a click, but they counter this with the ability to build an actual shopping experience. Additionally, a salesperson may have the discretion to give a customer additional discounts in store, as opposed to needing a specific coupon code online. Not only does this make for a satisfied customer, it allows a retailer to build a more personal relationship with the happy customer, who in turn may be more inclined to be loyal to that retailer.
Developing the In-Store Shopping Experience
For stores to succeed today, retail is not just about moving merchandise. While some stores have developed a warehouse feel, packing in as much merchandise as possible, others have taken a different approach. Rather than merely loading up on product, they develop a richer environment, building out a shopper experience that accentuates the value of the real estate for a shopper’s psyche.
Nordstrom is one example of a company that is working to deliver more for customers with its Nordstrom Local branded locations. The stores in this brand provide personalized services to shoppers, including personal stylists, in-store manicures, and even a drink counter. This adds luxury elements to the shopping experience itself, encouraging shoppers to spend more time in the store rather than engaging in quick-strike shopping behavior
Brick and mortar stores provide human contact and tactile experience. It allows shoppers to connect with product displays and try before they purchase. With large consumer durables purchases, the added tactile and visual experiences can be especially invaluable. When in person, it’s easier for consumers to tell how well the finish on an appliance will fit in with the rest of the décor. On a computer screen, different resolutions and screen angles can skew how the consumer perceives the colors (see also: the infamous dress). Being able to interact with an appliance to see, for example, how easy a door is to open can help a consumer decide whether that option will fit their lifestyle. And in contrast to the search and procure element that makes online shopping attractive to some, in-store shopping gives opportunities to wander and to discover how different product categories fit together. For retailers, this means the option to increase tickets while building loyalty.
Combining Online and In-Store
Many articles have been written about the importance of a well thought-out and comprehensive omni-channel strategy. Therefore, the thinking that online shopping and brick and mortar shopping can only operate in a zero-sum relationship belies the potential for connecting online and in-person elements. Nordstrom Local stores connect their online operation to the stores with elements like free pick-up of online orders, and free returns of online orders as well. Instead of maintaining online and brick and mortar shopping as distinct entities, this approach to experiential retail creates both reasons for shoppers to shop across channels and genuine benefits for doing so.
Virtually every retailer has an online presence of some kind. But many of today’s customers use Internet research to gather information before shopping in stores. Companies should use their websites to complement their physical locations. They can direct foot traffic by providing information about what stores have available, by allowing online selection for in-store pickup, and by building out their mobile apps to help customers navigate their stores. The savviest companies do not operate in online and in-store silos, but as interactive stores with presences that straddle these two worlds.
Companies are already finding new ways to integrate the web with the real world. With 77% of Americans owning smart phones, brands and retailers alike are using Virtual and Augmented Reality to sell more products at retail locations. For example, PPG uses photo uploads to virtually paint a room. On the retail side, Lowe’s has worked with its Innovation Labs to create ways for consumers to find what they need in-store via their phones. They’ve also incorporated AR and VR tools to help consumers learn the skills they need for DIY home improvement projects, while also recommending which products will be best for their projects.
Coordination over Competition
No one can deny that online shopping has become more prevalent in the last decade. From 2016 to 2022, total retail sales are expected to almost double, from $360 billion in 2016 to a predicted $712 billion in 2022. But this growth does not mean brick and mortar retail is dying. It merely means that, in the current business environment, retailers must adapt. Having a website does not guarantee e-commerce sales, any more than having a storefront guarantees on-site sales. Companies need to develop strategies to maximize the returns of both retail streams.
Stores looking to succeed in the brick and mortar environment should not seek direct competition with the online experience. They should look instead to both interact with online resources and build out reasons for customers to visit stores. Efficiency is not the enemy, but neither is it the beginning and end of the shopping experience. Stores that innovate and exist as shopper-focused retail environments will drive the future of brick and mortar shopping. Building out a multi-faceted retail strategy provides the only real option for ongoing retail growth and success.