While brick-and-mortar retail has been hit hard due to Covid-19, it’s still far from dead. Changes that were already happening were accelerated, but for brick-and-mortar operators who are able to adapt and do whatever it takes to make it through this pandemic, they could find a world of opportunity.
To capitalize on this opportunity, retailers should focus on creating in-store experiences that inspire customers to keep coming back.
Online sellers play a massive and growing role in the modern economy. People enjoy the convenience of shopping from their smartphones at two in the morning. Options for personalization provide even more incentives for consumers to use e-commerce channels for certain types of purchases. The same remoteness that gives online sellers a few advantages can come with heavy drawbacks, however, and retailers that fill those gaps could find themselves busy with customers for many decades to come.
The State Of Brick-And-Mortar Retail
Despite the popularity of online options, physical stores ended the last decade on a high note; according to data from the U.S. Department of Commerce (via The Balance), “Brick-and-mortar sales rose from $2985 billion in 2016 to $3043 billion in 2017, a two percent increase.” And shopping in person remains a strong preference for many consumers. My company’s State of Consumer Behavior Report back in January found that 57.5% of consumers over the age of 35 prefer to shop at physical locations, while 45% of consumers ages 18–34 still prefer to shop at physical locations.
The e-commerce industry appears to be outgrowing brick-and-mortar, yet despite the difference in pacing, physical stores continue to dominate in terms of actual sales. According to U.S. Department of Commerce data (via Digital Commerce 360), e-commerce sales made up 16% of total U.S. retail spending in 2019. Even if online sellers continue their rapid expansion, physical retailers could maintain control of the market for years to come.
Brick-and-mortar locations enjoy several advantages that could put a ceiling on the potential of online-only businesses. Physical stores house employees who can talk to customers, and they allow customers to put their hands directly on products and work out issues in real-time. Young people may love their digital options, but I’ve found that they also love unique experiences and human connections. They may be happy to buy from local stores, especially if they can tag themselves on social media or treat the opportunity as more than a transaction.
None of this should indicate that retail success will be easy in the new decade, though. Online sales likely won’t slow down, and consumers’ preference for digital research (regardless of where they make their final purchases) gives online companies a leg up regarding first impressions. According to Salesforce and Publicis.Sapient research compiled by Retail Dive in 2018, 87% of customers surveyed start their product searches online.
For retailers, these facts reveal two important truths. First, all but the trendiest of small local shops should maintain a digital presence to some degree. Companies simply may not survive in the 2020s if the internet doesn’t know they exist. Second, in-store experiences determine which retailers gain ground with consumers and which ones lose business to online competitors. This is the key — retailers who do more than sell products will thrive, while those that struggle to differentiate themselves from online options could see their market share dwindle down to nothing.
Creating The Essential In-Store Experience
If brick-and-mortar retail were truly dying, digital brands like Warby Parker, Casper and Amazon would not have spent money acquiring desirable locations for their physical stores. Consider what these three digital companies do in their physical stores to complement their online presences:
As one Forbes contributor describes, Warby Parker provides an in-store experience that elevates its brand as a welcoming provider of personalized products. Greeters at the doors help customers start a highly personal shopping experience and ensure customers feel comfortable from start to finish. Salespeople use tablets to ring up sales, eliminating friction from the sales process. When combined with a generous return policy, Warby Parker provides a clean and efficient in-store experience.
Casper announced in 2018 that it would open 200 retail stores. Since then, the indie mattress brand has done impressive work to further the customer experience. Casper’s concept store, The Dreamery, invites customers to pay a fee to take a short nap. Dreamers enjoy fresh pajamas, private pods and post-nap coffees before they leave feeling refreshed. The Dreamery, which is only in New York City, provides a shareable experience for potential mattress buyers. Casper’s other stores also deliver a similar impression of expertise in the realm of sleep.
Amazon offers a variety of store options for its massive customer base. Two store types, Amazon Go and Amazon 4-Star, made waves for me because of the way they changed consumer expectations. Amazon Go stores famously require no cashiers — customers walk in, grab what they want and leave. Cameras and IoT devices figure out their totals. Amazon 4-Star stores, meanwhile, stock items with great customer reviews and items that are new and trending.
As these three companies and all the smaller successful retailers around the world prove, I believe physical retail has room for anyone with an eye for innovation. Many customers expect better in-store experiences from retailers today, and I believe those expectations will only grow higher as the years pass. Attention to detail, shareable moments, personalization and unique value offerings have so far defined the best in-store experiences, but the smartest retailers will continue to challenge the status quo to see how they can delight customers in new and unexpected ways.