Many people originally believed the rise of the internet would result in the extinction of brick-and-mortar shopping. The rationale was that retail locations could never compete with the ease and convenience of going online to buy and the ability to find “anything” and have it shipped to your doorstep. The same logic might have even been applied to the mail order catalog business.
What really happened, however, is that the convenience of internet shopping has not destroyed brick-and-mortar businesses. In fact, brick-and-mortar stores have strengthened consumer awareness and loyalty for many brands. Why? A retailer’s physical stores, in conjunction with its other platforms, play an essential role in meeting customers’ multidimensional and dynamic shopping needs.
While it’s true that many “C-rated” malls are dying, the best-in-class shopping centers are thriving and adapting as the shopping landscape is changing, and many retailers are rising to today’s challenges with innovative and flexible approaches. For example, why is the king of online retail, Amazon, among other pure-play online brands, opening physical retail stores? Because they’ve listened to consumers, and they’re pressing all the right buttons to create the optimal omnichannel shopping experience.
Millennials don’t solely shop online
Millennials are driving much of today’s retail spend, and an Accenture study projects that their spending in the US will reach $1.4 trillion annually by 2020 and represent 30 percent of total retail sales. This demographic consumes goods and shops the same way they consume media and go through their day — across platforms/channels. This is the generation of Pandora, Spotify, Uber and iTunes. The integration of information across multiple platforms is key to today’s customer experience.
The solution here, for many retailers, is to offer a truly omnichannel shopping experience, with multiple dots connecting all phases of the path to purchase. Physical brick-and-mortar stores offer consumers the ability to see products firsthand before they take them home, as well as sidestep shipping-related headaches.
The winners and losers
While foot traffic is down in many malls, those that are the most challenged are ones that haven’t been renovated in years, have major anchor stores that are closing or are still offering merchandise assortments and product presentations that no longer resonate.
However, it is important to pinpoint the specific locations that are continuing to thrive and understand why, and it’s also valuable to note the investments being made in renovating existing malls. For example, Tysons Corner Mall in Northern Virginia, the largest mall in the Washington, DC area, is flourishing; meanwhile, the Beverly Center and Century City malls in Los Angeles are currently undergoing major renovations — demonstrating a renewed sense of opportunity in brick-and-mortar.
Additionally, the market has demonstrated a strong correlation between successful brick-and-mortar stores and successful e-commerce business. At a recent conference, Macy’s noted that when they close a physical store, their online business drops in that trading area, as well.
Retailers have observed that many customers buy a product online and return it in-store. But if the customer doesn’t have a store to return it to, it seems they are less likely to buy from that retailer online. Thus, having a physical location is more important than ever.
Likewise, former online-only retailers such as Bonobos, Warby Parker and Tuft & Needle have expanded their customer base by opening brick-and-mortar locations. They are attracting new customers that they would likely never access if they were online only. And when social media is pay-for-play — like Facebook and Instagram — it gets expensive to acquire customers through social channels.
Smart retailers are bridging the gap between online and brick-and-mortar. In these instances, the brick-and-mortar store enhances the online experience, and they don’t even have to stock inventory.
When you need some level of expertise
Brick-and-mortar stores play a strong role in building brand loyalty. Customers enjoy knowing that they can add to the research they’ve done on a product by getting recommendations and information from knowledgeable employees, especially when the product is expensive or technical.
Visit the photography megastore B & H Camera in New York City, and you will see throngs of consumers shopping their expansive assortment and speaking with product experts to get questions answered. Their online pricing is identical to their in-store pricing. This point is important, because if online pricing and in-store pricing are misaligned, the consumer may use the physical store to gather information and expertise but then jump ship to make the purchase elsewhere for a lower price.
Such is the situation at Barnes & Noble, where the physical store will not match prices quoted online. Customers are still using their mobile devices while they are in the physical stores, and if they know they can get a better deal from the comfort of their own home, it’s an easy decision to pack it all up and head home to buy the item cheaper off of Amazon. When online and in-store systems are not integrated, the consumer has no justification to visit the brick-and-mortar store in the first place.
Stores like Tuft & Needle and Bonobos integrate these two systems seamlessly, with a single pricing structure regardless of the channel. They do this because they know that savvy consumers won’t put up with anything less. They want to maintain a high level of customer satisfaction across the omnichannel experience.
While this price transparency and alignment are important, so is the buying experience. Barnes & Nobile often falls short in this arena, as well, giving people few and compelling reasons to go to the store at all, when they expect that it will be crowded with few places to sit and so on.
The democratization of commerce
We are living at the intersection of social media and commerce, in what we call the age of “the democratization of commerce.” This means that shoppers not only utilize multiple platforms when considering and completing purchases but also share their merchant and product feedback via social platforms. And shoppers’ bullhorns are loud and brand-impacting.
When people visit Apple’s App Store, they don’t purchase products that have only one star. Similarly, when they do their research on Yelp for a restaurant, they’re more likely to make a reservation for a place with hundreds of positive reviews and five stars.
Today’s consumers — especially millennials — value feedback before they invest, and the more feedback, the better. The 360-degree omnichannel experience seamlessly ties together the social media and commerce worlds to better serve the next generation of well-informed consumers.
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