In today’s retail market it is best not to be a solely brick-and-mortar store, but it is also not enough to be exclusively online. The best retailers these days are offering consumers omnichannel shopping experiences.
Despite what the daily headlines forewarn about the apocalyptic future of brick-and-mortar retail, the end is actually not near, explained Harvard Business Review. While digital media is completely transforming the retail industry, the advancement of technology has yet to completely remove the average consumer from physical retail properties. In two decades online retail has taken 6 percent of the total market. And the presence of e-commerce will only grow from here.
This year online sales will increase by 20.1 percent to reach a total volume of $1.5 trillion, according to research from eMarketer. However, this growth will come primarily from increasing digital penetration into emerging markets – not from the brick-and-mortar faithful being converted.
The best of both worlds for retailers
Online sales in the United States continue to trend upward though, and by 2017 may account for up to 10 percent of all retail in the country, according to CBRE, a commercial real estate group. Because of this many traditional retailers are investing in facilities that will allow them to streamline delivery services for their online stores – creating an omnichannel shopping experience for customers.
“To keep up with growing demand, e-commerce companies and, increasingly, traditional retailers are making major investments in big-box facilities that function both as warehouses to store goods and distribution centers to fulfill online orders,” said Adam Mullen, head of supply of chain services at CBRE, in a press release detailing a research on the effect e-commerce has had on commercial real estate.
Traditional retailers’ facilities purchases are projected to occur more often in secondary markets, so that shipping services can be closer to consumers not located in major metropolitan market, the CBRE report, called Rapid Growth Of E-Commerce Reshaping US Industrial Market, noted.
Signs are pointing to retailers’ developments of both online and physical stores, but are they doing the right thing? About half of the growing number of e-commerce sales in the United States belong to retailers with a physical presence, reported Harvard Business Review. In fact these stores still control somewhere between 94 percent and 97 percent of retail sales. Apple and Macy’s both can boast online sales that are surging at an even faster pace than that of internet retail giant Amazon.
Also, online retailers don’t necessarily hold massive economic advantages over physical retailers. In fact with logistics chains to maintain and fulfillment centers to run, the cost of managing an online business may be the same of that of a store for some, the news source explained.
It is best to maintain balance between physical and digital presence, so that the consumer can access inventory from anywhere in any way he or she chooses. For stores that can create an omnichannel selection for customers, their online or mobile inventories are simply another way to introduce consumers to their physical locations. It is marketing with the additional benefit of directly creating revenue.
Because of this, foot traffic isn’t as an important factor as it once was to a retailer’s revenue. While foot traffic is still essential for maintaining a physical presence, they are able to make up for potential lost brick-and-mortar revenue through online stores.
In fact many companies that started as pure e-commerce companies have since added physical locations in order to round out the shopping experience for consumers. A few that have done this are Athleta, BaubleBar and Bonobos.
For businesses who want the fullest access to consumers, an omnichannel presence is the best way to reach them, and retailers from both sides of the retail battleground are beginning to see that.Back To Blog