Brick-and-Mortar is Still the Foundation of Retail Success
Tuesday, The Wall Street Journal reported retailers are shifting their priorities from offline to online. According to ShopperTrak, retail foot traffic has fallen 5 percent or more each month for the past two years (with the exception of April 2014). Even with the advantage of the summer weather, shopper visits dropped a reported 7 percent this past June. WSJ goes on to report new data from Moody's Investor Services, stating in-store growth at the 100 largest retailers by revenue has slowed to less than 3 percent compared to 12 percent three years ago.
Despite these recent headlines, I disagree that brick-and-mortar shopping is dying. Over the last year-and-a-half, many online only brands have moved offline to grow their businesses. With the likes of Athleta, Birchbox, Bonobos, Rent-the-Runway and Warby Parker growing revenues from brick-and-mortar storefronts, I believe it's just the opposite: retailers should be more concerned finding a happy medium between both brick-and-mortar and digital than focusing solely online.
Brick-and-mortar stores are a fundamental component to an omnichannel retail brand's success. While big-box retailers are making moves to scale back their physical footprint, I don't think that means retailers should be rushing back to e-commerce-only models. Many "online only" retailers have moved offline to not only offer an extension of their online storefront, but also create a better customer experience.
AT Kearney, a consulting firm, recently released a report titled On Solid Ground: Brick-and-Mortar Is the Foundation of Omnichannel Retailing. The study, which surveyed over 2,500 U.S. shoppers of all age groups, including teens, millennials, gen Xers, baby boomers and seniors, revealed that 95 percent of all retail sales are captured by retailers with a brick-and-mortar presence. The majority of millennials prefer trial and test, purchasing, and returning products to a physical storefront. In addition, the study revealed that 55 percent of those polled preferred to use digital and physical storefronts throughout the shopping journey.
"The decoupling of value capture is important for retailers to understand as they consider resource allocation decisions across channels to ensure that the true value the physical store creates is accounted for properly," states Mike Moriarty, AT Kearney partner and co-author of the report.
Lastly, brick-and-mortar stores are becoming increasingly important to retailers for inventory and shipping purposes. The study confirms that, overall, consumers prefer in-store pickup over home delivery.
"In-store pickups exclusively offer a sense of reliability and trust that consumers don't find online and through home delivery, in addition to the obvious benefit of being able to take goods home immediately," states the report.
What are your thoughts on physical storefronts? Let us know by commenting below.