Over the past few years, the retail industry has witnessed unprecedented digital growth with increased investments from retailers on digital assets than ever before. So how are bricks-and-mortar stores performing? In fact, as per a CNN Money report, “2017 just set an all-time record for store closings”. This retail apocalypse has triggered a basic question in everyone’s mind — are physical stores really dying? A recent survey by Retail Dive on the buying behaviour of US consumers highlighted the importance of store visits. Amongst them, the top reason for visiting stores was ‘try before you buy’ followed by instant gratification, ability to return the product more easily and the enjoyable retail experience.
While approximately 90% of all retail sales still take place in stores, sales from e-commerce are expected to reach 17.5% by 2021. However, contrary to this, a recent PwC research on preference to buy online versus in-store purchases shows that the need for in-store experience still exists. In fact, bricks-and-mortars are more relevant now than ever before. Since the line between channels are blurring, retailers need to focus on creating a seamless experience across online and offline in order to attract today’s consumers, and gain a competitive edge in the market.
Here are four strategies and recommendations to help businesses achieve this:
1. Become experience centres
Retail innovation, including magic mirrors and VR, can create interest for buyers and become a compelling reason to visit a store. They can also improve personalisation. For example, Sephora’s colorIQ technology personalises and creates a four-digit code by scanning the face which can be used to purchase the right make-up base.
2. Buy anywhere, deliver anywhere, return anywhere
The online world will have lower margins given the price competition and free delivery modes. Digital native companies will always do better in online sales compared to traditional ones but bricks-and-mortar has many other distinct advantages, such as cross-channel delivery models like click and collect. The strategy of ‘buy anywhere, deliver anywhere, return anywhere’ creates seamless experiences across channels through technological investments.
3. Become fulfilment centres
This will lead to increased availability of inventory at no extra holding cost. Businesses can also get away with distribution centres and associated real estate costs. Proximity helps in same day deliveries and retailers can even think about an hourly delivery model. For grocery and fresh food items, this is a boon as items can be picked from the store and shipped across swiftly. Many retailers including Target and Tesco are already doing it. Walmart used its store associates as delivery personnel on their way back home.
4. Stores provide touch and feel
Online technologies still cannot replace the touch and feel of the product that retail stores provide. A UF Warrington research (Florida) actually showed that online sales went up by 29% when the retailer opened a bricks-and-mortar store, indicating consumers really try the product in the store and buy it online. For the same reason, Amazon’s decision to acquire Whole Foods and open an experimental grocery store has attracted a lot of interest. So the bottomline is, stores are important but the retailer needs to reimagine the role of the store.