How successful online retailers are now reinventing brick and mortar

Welcome to the new era of brick and mortar

Digital is reshaping the retail industry and rewriting the rules of brick and mortar. It’s why dozens of online retailers are investing in stores, bringing their magic touch to the physical realm.

Why the turn of events? Because digital is reinvigorating brick and mortar retail.

 Despite scenarios depicting the 'death of the retail store' and rumors of a 'retail apocalypse', actions speak louder than words.  Stores are where the action’s at, even for Millennials.

• Stores are where 70% of global Millennials and 77% of U.S. Gen-Z's prefer to shop.
• Stores are where 90% of US retail sales happen.

 For traditional retailers, this is great news!

 But don't get me wrong. In today's retail, just having stores is not enough. Retailers need a presence across all physical and digital touchpoints, wherever their customers shop. 

Pure play retail is not the way, no matter how you look at it 

In this new era of retail, omnichannel is the trick.

For online retailers, this means extending the essence of their brand into real-life customer experiences that go way beyond clicks. Many have seen tremendous success with stores, focusing on the emotional and personal shopping experiences their customers crave along with the convenience they’re accustomed to online.

For legacy brands and CPGs, depending on retailers to get their products front and center is not going to be enough to compete. That’s why many have built ecommerce sites and are now opening impressive stores, owning the customer shopping experience and the data. Something that has largely been in the control of their retail partners, until now.

For traditional retailers with a brick and mortar footprint, they’re in a great position to compete by using their existing stores for omnichannel retail – once they decide which to keep, which to shutter and which to use as fulfillment centers for their online business.

Stores give everyone the power to disrupt the disrupters if used to their full potential as part of an omnichannel retail experience.

Stores are the starring attraction in omnichannel retail

Online is king for research, comparing prices, reading reviews and its availability 24/7. Mobile shopping is right on its heels. But stores still take center stage. Because people love to experience a product before buying.

• How a fabric feels on their skin.
• If that gluten-free product tastes like the real thing.
• How their skin reacts to a new moisturizer.
• If that sofa is as comfortable as it looks.

Shopping in-store is not always about the transaction either. It’s a destination, a touchpoint where human interaction plays a critical role in a complex, multi-channel journey that’s as individual as the person.

A place to try out products already researched online, to speak with expert store associates who can answer any question, find any item, make a great recommendation, and make checkout fast and painless.

A store is just as much about convenience as the products. Not everyone has the time or patience to shop around. Some people come in knowing exactly what they want, and if isn’t in stock that’s not really their problem. They know another retailer will find it for them, but they would much prefer you take care of it for them right then and there.

That’s what modern retail is all about. Creating a unified shopping environment where online and offline blend seamlessly, so a customer can get the service and information what they want anytime, anywhere. Seamless, easy, convenient and rewarding.

 

Battling it out for attention

E-tailers have the technology and agility to lead the way

Ecommerce pure players have a strong advantage because their digital foundation and mindset allow them to innovate faster.  More in line with the trajectory of evolving consumer habits, they have the agility and speed to be first to respond to their customers’ changing demands.

They understand that retailers need to think and act like tech companies to innovate and compete, and essentially that’s what they are. Software companies who sell retail. A brick and mortar business was likely far from mind when building their model. Until now.

As they disrupted the retail landscape over the last decade with great success online, the tables are turning. On the plus side, they do have several advantages:

• Being data-driven, they can think hyper-locally and open stores in proximity to their most valuable customers.
• Their commerce technology is modern, flexible and scalable, so they don’t have to deal with legacy systems and fragmented data.
• With technology built for omnichannel, they can rapidly test and launch new experiences in their stores that are seamlessly connected across touchpoints.

 There’s always a but… Real estate is a big investment. Aside from finding the perfect spot, there’s a big financial and time commitment involved. 

 Brick and Mortars have the footprint and the people

Then there are traditional retailers with the big plus of having an established brick and mortar footprint. They’ve already invested in real estate and have physical proximity to their customers across targeted cities.

They also have the personnel, merchandise and human contact with their customers. Plus, many have built an online presence in the last few years as well. Those who’ve built on modern, cloud-based ecommerce platforms may have a real edge all around.

Here’s the but… well, two actually.

1. First, it’s a time of drastic change meaning their brick and mortar business needs serious reflection… the status quo doesn’t work in the new era of retail.  What is the role of their stores now in an omnichannel strategy?  Which locations are fruitful, which should be shut down? Which should be used as fulfillment centers? 
2. Then there’s their ecommerce business. Having a presence on multiple channels is great, as long as they are unified, and provide the flexibility and scalability to innovate and grow at the pace of digital. If not, their customers will outgrow them.  

On the plus side:

• Rather than competing for prime real estate, they have the data to determine where to stay and where to leave, and perhaps avoid the pitfalls of their counterparts.
• What may be their biggest advantage is being able to leverage stores for their location and inventory to fulfill online orders faster and more efficiently, offering customers the speed and convenience they prefer when ordering online.

5 undeniable reasons brick and mortar is here to stay

1. Experiences over products

A store is a physical and emotional extension of retailers’ online presence, and vice versa.  After all, if they want customers to take time out of their day to make a trip to their store, it’s got to be worth their while.

Birchbox, a popular subscription-box, recently opened a store in SoHo. Not only can shoppers build their own custom Birchbox for $15, they can test items out at the Try Bar, pick up their favorites from past boxes, and get their hair and makeup done.  Best of all – instant gratification. They leave with purchases in hand instead of waiting for their monthly subscription to arrive.

Other brands offer shoppers food and drinks, menswear innovator Frank & Oak has in-store barbershops, not because they sell shaving products but because their fashion-conscious customers love looking and feeling great, and that’s how they feel when they leave. You can’t match that online.

Bonobos ‘guideshops’ invite customers to try on products and engage with personal stylists, but no one leaves with their purchase in hand. All orders are treated through their online fulfillment warehouse and distribution center. They understand their customers, knowing these men don’t necessarily want to walk around with shopping bags, and are happy to shop and leave and have everything delivered to them.

It must be working since reportedly their average in-store purchase is double an online sale.

More great examples of how brand manufacturers are connecting with customers in-store.

2. Fulfillment centers

One of the biggest ways to delight consumers these days is through in-store pick up and returns. Many online shoppers weigh this option heavily into the equation before pressing the buy button. If Amazon or Walmart can deliver something in a day or two, why should they ever have to wait longer or pay more for rush delivery?

Being able to pick their order up in a nearby store is a wonderful option and consumers are loving it. According to PWC's 2017 Total Retail Survey, 88% of consumers are willing to pay for same-day or faster delivery.

Being able to return an online order in a store is icing on the cake. So not only do retailers with stores have a terrific advantage in this area, they can leverage inventory from stores to fulfill orders faster and more cost-efficiently based on location.

3. Omnichannel sales

Speaking of using stores as fulfillment centers, when offering customers the option to pick-up or return an online order in-store, the doors open to more selling opportunities.

Whenever a customer crosses the threshold into a store, there’s opportunity for sales associates to engage customers, gather data, and recommend relevant products.

And it works! According to UPS research, 45% of customers who click and collect end up buying extra products when picking up their order, and 70% of shoppers returning items in a store end up purchasing something else.

4. Marketing and branding

“From a market research standpoint, [a store] pays for itself. The amount of market research you gain just by observing people, it’s the equivalent of 100 focus groups,” said Sucharita Mulpuru, senior analyst with Forrester Research.

Stores are terrific ways of bringing a brand to life. Nothing can beat a sensational experience to communicate the essence of a brand, and helpful and friendly store associates are the most influential brand advocates.  

Branding aside, stores are data gathering centers. A place to observe real customers, how they shop, where they shop, what they buy, what they expect from staff. This intelligence is invaluable for making the right moves to innovate as the role of the store evolves as more digital experiences become the norm (augmented reality, robots, drones, virtual reality…).

5. Digital is the driver of convenience, but stores are all about the experience.

Stores can level the playing field where any retailer (traditional, digital, big brand) can be a disrupter or a disruptee.

Stores are differentiators.

Stores are competitive advantages.

Stores are the future of retail.