Why the Future of Brick-and-Mortar Retail Looks (Surprisingly) Strong

Don’t count out brick-and-mortar retailers.

While it’s true that clicks haven't overtaken bricks in total retail sales, e-commerce has fundamentally changed consumer behavior and heightened their expectations for customer experience.

Claiming just 8.9 percent of total retail sales in 2017, according to the U.S. Department of Commerce, e-commerce is still a relatively small bite of the overall retail pie. Online retailers like Amazon.com and Etsy are having an outsized impact on the broader retail market.

That impact is multifaceted: online retailers are taking up market share while pushing brick-and-mortar retailers to innovate and transform their businesses for the digital era. Those that say that brick-and-mortar retailers are on their way out aren’t looking at the bigger picture. The reality is that brick-and-mortar retail is evolving in response to changes in the market.

In fact, as many e-commerce players open their own brick-and-mortar stores (think Amazon Go), it’s clear that competition and the increasing need for omnichannel platforms to reach customers are shaking up retail in a big way.

How Brick-and-Mortar Retail Can Still Deliver for Customers

Let’s be clear: customers are still showing up for brick-and-mortar retail — in big numbers.

That’s because customers are still getting a lot out of their shopping experiences with brick-and-mortar retailers. From convenience and gratification to inspiration and that special feeling of holding a product you love in your hands, customers are still gleaning positive experiences from in-store shopping.

Meanwhile, brick-and-mortar retailers are adding on digital transformation strategies to augment those already strong in-store experiences. As Walmart and Target roll out same-day delivery and in-store pickup for online purchases, it’s easy to see how brick-and-mortar retailers are stepping up to match (and sometimes surpass) what online retailers are bringing to the table.

At the same time, online retailers are beginning to see brick-and-mortar stores as a new marketing channel that offers lower customer acquisition costs while digital marketing costs continue to rise. These previously digital-only merchants are now building a brick-and-mortar presence to stay competitive.

The point here is that both online and brick-and-mortar retailers are executing omnichannel strategies to meet customers where they are. As the customer journey is no longer centered around the Main Street retailer or shopping mall, retailers on both sides are embracing connected devices, in-app purchases, and other modern retail tools.

As technology reshapes customer habits, retailers are evolving and changing how they leverage brick-and-mortar stores as yet another tool in their toolbox.

The Experts Weigh in on the Future of Brick-and-Mortar Retail

So what are the thinkers and doers in the retail space saying about the future of brick-and-mortar retail?

In short, they’re offering up a number of strategies for both physical and online retailers to thrive as the nature of the industry evolves.

Mikhail Damiani, CEO of Blue Bite, shared that retailers will need to create less fragmented shopping experiences for customers through the better use of data, specifically on mobile devices. With the abundance of data feeding into CRM systems and loyalty programs, leveraging that data intelligently is an important next step for retailers:

“Considering most people are spending the majority of their time consuming media and engaging with brands on their phones, retailers will need to adapt. This means fewer digital screens and fancy displays shouting at consumers, and more opportunities for people to engage with the physical space using their phones as a remote control to the experience.” — Mikhail Damiani, CEO, Blue Bite

Robin Scott, director at Silicon Dales, shared that many brick-and-mortar locations will evolve to offer more upselling and cross-selling opportunities for retailers, beyond just serving as a location to collect online orders. He also predicted that same-day delivery will become a much more standard practice:

“Brick-and-mortar stores will need an online offering, that's for sure. If you offer online, and you have a brick-and-mortar outlet, the norm will be you will offer same-day delivery. This will likely be through a service provider, where a few players are entering the space, such as Uber.” — Robin Scott, Director, Silicon Dales

Jordan Ekers, chief customer officer and co-founder at Nudge Rewards, believes that retailers would be smart to not give up on in-store customer experiences because many upwardly mobile millennials are still seeking those in-person experiences as part of their shopping journeys. The data seems to back this up. Two-thirds of millennials shop in stores every week, and they're seeking out the human side of the brand. Ekers also offered up an optimistic view of how brick-and-mortar retail can leverage both digital and in-store efforts to produce better results for customers:

“Brick-and-mortar isn’t dying, it’s evolving. Leading retailers are changing the in-store experience to increase brand affinity and conversions. A major challenge is removing friction from online and offline experiences in an omnichannel world.” — Jordan Ekers, Chief Customer Officer and Co-founder, Nudge Rewards

As Consumer Behavior Evolves, Retailers Must Adapt

Even though the future of brick-and-mortar retail is changing rapidly, brands are working hard to stay on top of market shifts. New technologies and changes in consumer expectations are driving brands to embrace digital transformation at a break-neck pace. The good news is that many retailers are getting the job done.

By developing data-driven customer experiences that merge online and offline assets, retailers are embracing an omnichannel approach and altering the future of brick-and-mortar retail.

Alan Finlay is a co-founder of Boomtown, a company that helps organizations reduce the complexity of selling, activating and servicing technology products used by real-world businesses.