Although the growth in on-line sales is unquestionable, that’s not a reason for retailers or manufacturers to take their eye off the ball with Bricks & Mortar.
In the UK a mere 4.4% of grocery sales are on-line and the IGD predicts that this will rise to 8.9% by 2019. OK that’s strong growth but it still leaves over 90% of sales to be accounted for by physical stores.
A similar picture is also abundantly clear in the US where bricks and mortar represents a massive 90% of total retail sales and remarkably the preference for the physical channel is stronger among teens than any other age group according to management consultants AT Kearney.
So there is clearly a healthy future for bricks and mortar in the retail mix, but with the transparency of the internet and the ability of shoppers to search, compare and buy products from across the globe from the comfort of their armchairs what lies behind the on-going draw of the physical store?
AT Kearney’s report also points to at least one of the potential appeals. In a survey of some 2,500 shoppers across 8,500 shopping trips consumers were asked to state their preference for bricks and mortar over on-line at different stages of the journey. The results conclusively showed that when it comes to making the purchase a physical store was overwhelmingly preferred. Put simply, the immediacy of a store in terms of being able to pay for and receive your goods there and then trumps the on-line experience, and no amount of drones flying the skies will ever offer the instant gratification of handing over your cash and walking out with your purchase in-hand.
In the world of grocery retail immediacy has a yet more critical role with concerns over freshness and the appropriateness of substitutions maintaining a position at the front of many shoppers’ minds.
Ultimately physical stores give us more control over what we buy and when we get it and that’s something that we don’t like to give up, so the choice to shop on-line is always a balancing act between losing control and gaining in other areas such as price and choice.
But beyond the control we get over our shopping when we pop to the shop and immediately pick up what we want, bricks and mortar has additional advantages that are causing the on-line retailers to invest in their own physical presence.
For many years I conducted customer research for Argos in the UK, which in a lot of respects was ahead of its time and as a business continues to thrive in the omni-channel world. What made Argos unique was the fact that all of its product was advertised in a catalogue (much like an offline predecessor to today’s websites) and the stores themselves were little more than ordering and pick-up points without any product to speak of on display. Countless times over the course of working with Argos, management would discuss the drawbacks of this model when it came to the sales of items such as soft furnishings, furniture and even clothing (which Argos dabbled in for a while) the biggest misgiving being the inability of shoppers to see and touch the products for themselves before parting with their money. Some twenty years on and this remains an issue for retailers operating in the digital world, since regardless of the reach enabled by the internet and the economies afforded through automated distribution centres and postal fulfilment, on-line retailers operating in sectors such as apparel and furnishings struggle to convey the quality of their products without a physical showroom.
For this reason; from Made.com’s showrooms in London, Liverpool and Yorkshire, to Shoes of Prey’s US concessions in Nordstrom and Google’s store within a store set up with PC World; we are seeing on-line players beginning to develop an offline retail presence.
Others are developing their own physical presence in order to deliver a stronger customer service element to the brand experience such as in Asics flagship London store where a RUNNING LAB analyses the customers physique, strength, aerobic endurance and running style in order to help match them to the perfect sports shoe.
The recent foray of Amazon, perhaps the most ubiquitous on-line retailer of them all, into bricks and mortar has been met with some puzzled brows. After all, how can the “everything everywhere” leviathan possibly expect to succeed with a modest bookstore in Seattle? But think about the alternative, a giant cavernous space loaded with every title ever printed – an offline version of Amazon.com. Just how many people would visit that, and how many of those who did would ever find their way out again? The modest bookstore in contrast gives a more personal and less clinical edge to the brand and is the sort of place where people who still want to visit bookstores feel at home. In addition it also provides a physical environment where events such as book signings can be held, enabling the brand to get closer to the people.
What is clear however is that in an omni-channel world the bricks and mortar element can no longer take a “pile it high and sell it cheap” stance. Beyond a requirement to process transactions quickly and efficiently there is the need for experiential retailing, immersive environments, storytelling and theatre which will inspire, educate, entertain and ultimately drive value, and to understand if this is being delivered requires an insight into how shoppers are using a store, where they go, what they engage with and ultimately whether this leads to a purchase.