Don’t Close That Store! Why Bricks Matter Just as Much as Clicks for Retailers
With malls closing at record rates and other retailers shuttering their stores reaching the thousands, there’s been a lot of talk about a retail apocalypse. However, if you dig a little deeper you’ll see that the future of retail isn’t so grim. Consumers still value the experience of shopping in physical stores. Even pure-play digital brands like Allbirds and Glossier are beginning to open stores so people can experience their brands in person. Most importantly, physical stores are a necessary pillar of a holistic fulfillment strategy. The retail landscape is certainly changing, but the news is by no means all bad.
Let’s Start With the Bad News
2019 was a record year for store closures in the United States. According to Coresight Research, retailers shuttered more than 9,300 locations in 2019, a more than 50 percent increase from the total announced closures in 2018. Add to this rising mall vacancy rates, according to The Wall Street Journal.
Now Here’s the Good News
These trends are enough to put fear into any retailer, but when you consider customer opinions, you’ll find a very different attitude in play. According to multiple studies, 85 percent of consumers still prefer to shop in-store so they can touch items, try them on, and deal with a knowledgeable sales associate. Add to this that 94 percent say they research products online before heading to a store to make their purchase, and you’ll find that customers aren’t simply choosing between online and in-store purchases — they’re following a shopping journey that bridges both.
While these encouraging numbers apply to all generations, there’s even more potential upside to stores when it comes to millennials and their younger cohorts. The Harris Group found that 72 percent of millennials prefer spending money on experiences vs. purely material goods, which is good news for stores that host branded events. Moreover, 74 percent of customers are more likely to buy the products being promoted when they engaged with branded event marketing experiences.
Light at the End of the Tunnel
For a view of the future of retailing, look no further than Kohl’s. Even after a few quarters of poor performance, the retailer has maintained its store traffic, in part through a partnership with Amazon.com. Not only does Kohl’s carry some Amazon products, but it also allows Amazon customers to return products bought on the website to its stores, demonstrating the power of a physical store in a holistic fulfillment strategy.
Retailers with physical stores would be wise to follow Kohl’s example, even without a partnership with Amazon. With today’s order management systems (OMS), stores can be a vital piece of a brand’s fulfillment strategy. In addition to buy online, return in-store (BORIS), there are myriad other fulfillment paths that can be supported by a network of stores. Customers who use buy online, pick up in-store (BOPIS) are known to spend more time — and money — when they show up. With multiple stores, you can identify and route products to where they're needed more easily than from a distribution center. Roughly 45 percent of consumers who enter a shop with the intention of collecting online products go on to make another purchase once they're in-store. Additionally, 71 percent of shoppers spend $50 or more when shopping in-store.
Retail apocalypse? Not exactly. What we’re facing today is a series of retail opportunities. Wise brands will leverage technology to link their store inventory to provide even more reasons for customers to stop in, pick something up, and maybe purchase even more.
Rob Shaw is senior vice president of sales and managing director, EMEA, at Fluent Commerce, a SaaS distributed order management solution for enterprise.