Digital is a power player in modern life, so it can be easy to think that e-commerce has taken over, leading to malls and stores like Macy’s and Sears to close across the country. The truth is those businesses are closing because they haven’t been able to adequately evolve and adapt to an omnichannel marketplace. Brick-and-mortar retail is still very much alive, but it is changing.
People Still Shop In-Store
According to the US Census, Americans do about 90% of their shopping in physical brick-and-mortar retail locations. When you consider that Millennials eclipsed Boomers as the largest generation in 2016, you begin to realize that this includes the younger, digital native generations as well. In fact, a survey from IBM and the NRF shows that an astounding 98% of Gen Z, the most digitally-obsessed generation, still shops in brick-and-mortar stores at least some of the time; a sturdy 67% shop in physical locations most of the time. The survey also reveals that most of Gen Z even prefers brick-and-mortar shops, a point which is backed by a survey by Accenture, which revealed that 77% of Gen Z worldwide prefer shopping at physical retail stores.
The Advantages of Brick and Mortar
Retail offers a strong element of instant gratification. Customers can leave a store with their purchase in hand, or they can return products immediately. They can engage with store associates with concerns right there in the store. Plus, there are no shipping fees. But quite frankly, brick-and-mortar shops offer something that online stores simply cannot: tangible experiences. Nearly three quarters of consumers prefer to try products before buying them. Physical locations tend to engender a sense of legitimacy, and it’s been shown that people make purchase decisions based on emotions rather than logic.
Stores that take the time to craft an experience also do better. For example, T.J. Maxx and Marshalls don’t do much to leverage digital sales; instead, they focus on providing inventory that shifts so regularly that every visit turns into a hunt for the right products at the right price. Knowing how to connect with your audience is just as critical in crafting good experiences. Toys’R’Us is focusing on interacting and engaging with kids by providing entertainment experiences like Pokemon trading days, Lego camps, and activity days for parades, crafts, and giveaways. The company is striving to make itself a place kids beg to head to for events and experiences instead of just more stuff.
That’s why we’re starting to see online retailers make the move to physical locations. Amazon is probably the best example of this. The retail giant has an array of offerings in the works: opening brick-and-mortar bookstores in cities nationwide, testing the Amazon Go convenience store with frictionless checkout, exploring full-sized grocery stores (for example, its recent purchase of Whole Foods), and developing stores focused on electronics (like Apple stores) and home furnishings and appliances. Amazon is a brand that wants to dominate the market, and that means it wouldn’t be investing in brick-and-mortar if physical experiences weren’t powerful for consumers.
The Trends We See in Brick and Mortar
Physical retail might still be the leader, but that doesn’t mean you should count out digital. E-commerce might only represent roughly 8% of all retail commerce so far in 2017, but it’s growing 4.1% quarter over quarter for a 14% growth year over year since 2016. More importantly, 85% of consumers want an integrated, unified experience across digital and physical retail experiences. Consider the fact that the survey from Accenture also revealed that 44% of Gen Z prefer to go into a physical location to get more information before making an online or mobile purchase. It might be tempting to believe that this is contributing to showrooming; 46% of people in the US will go into a physical location to test things before making a purchase online. However, 69% of people are participating in webrooming, which is the exact opposite — people learn everything about a product from a store online before heading to the brick-and-mortar location to actually make their purchase. Consumers want to be able to take advantage of retail in whichever format is frictionless and most engaging for them at their decision point.
That’s why retailers are increasingly looking to digital technologies to integrate into the in-store experience. Many companies are transitioning their current strategies by integrating cloud-based systems or apps to process the inner workings from employee schedules to restocking shelves. Many are integrating beacon systems to engage customers via their branded app and offer relevant information and promotions according to their location. Here are other trends to be on the lookout for:
- Increased omnichannel links between mobile and physical locations, much like Domino’s offering delivery and pickup orders via Facebook Messenger or Starbucks offering mobile drink and food orders for pickup (and enjoying) in-store.
- Like non-traditional store spaces that minimize inventory on the shelf and maximize product and service education and experiential testing, i.e., using showrooming as an advantage, such as the extreme cases of West Elm and Restoration Hardware, which will both open hotels as a unique form of product demonstration.
- Leveraging chatbots online to maximize the in-store experience, just like Sephora has with a bot that gives color matching advice and makes appointments with its beauty specialists.
- The rise of ship-to-store, which also has the potential to bridge the gap between e-commerce stores and physical locations, as seen with Lululemon over the holidays in 2016.
Shoppers still love brick-and-mortar retail stores, and they’re still shopping there. An omnichannel presence is more important now than ever before. This shouldn’t simply describe your marketing strategy; the digital world and the physical world are increasingly integrated in all aspects of a customer’s life. What it really comes down to is one of the biggest predictions of 2017 — brands that find bold ways to maximize personalization and enhance the customer experience will be the most successful.