December 5, 2019 by Monika Adarsh

It wasn’t too long ago when retail analysts all across the world declared a “retail apocalypse,” but physical retail stores’ reports since the last couple of months disagree. 

According to the US Census Bureau, the sales of the retail industry in the US has increased by 0.3% from September 2019, and 2.9% above last year.

 

eCommerce giant, Amazon, was predicted to wipe out the existence of physical retail stores. Thousands of articles and reports were written about the demise of brick-and-mortar stores. But not all news about retail is doom and gloom, as a myriad of brands such as Target, Walmart, Macy’s, and IKEA have gone above and beyond to give their customers seamless purchase experience. 

Despite the increase in the percentage of online shoppers, the majority of retail purchases that happen in America is by brick-and-mortar stores. According to the US Census Data, 90% of all retail shopping in America continues to happen in physical stores. 

As physical retailers continue to invest and technologically outperform eCommerce brands, there is a strong reason why there is a current resurgence in the brick-and-mortar stores. 

Digitization 

A host of physical retailers and online retailers are moving the omnichannel way such as Target, Sephora, Zara, and Walmart to name a few. 

Having established that, almost 55% of retailers don’t have an omnichannel presence. This has affected their revenue, brand image, and offering a quality customer experience a great deal. 

Brands with campaigns across four-plus channels will outperform single or dual-channel brands.

Retailers with extremely strong omnichannel customer engagement will witness a 9.5% year-over-year increase in revenue as opposed to 3.4% for those with weak omnichannel presence. 

Target’s earnings in August 2018 flew past Wall Street’s calculations and witnessed its most significant growth in 13 years. The retailer giant reported that comparable sales increased by 6.5%, online sales have grown by 41% buoyed by stronger foot traffic at physical stores. 

“We are starting to see a resurgence of physical retail as the market is correcting itself and digital leaders make significant investments in physical retail,” says David Bray, CEO of ad agency Briz Media Group, which services retailers that have tied up with tech companies. 

The resurgence of physical brick-and-mortar stores is now possible due to technology and its inception in retail. According to a new survey by A.T Kearney, 81% of Gen Z prefer to shop in stores, and 73% like to discover new products in stores. 

Technologies such as Artificial Intelligence, Machine Learning, IoT, and effective QR Codes campaigns clubbed with location-intelligent solutions such as beacons, and NFC Tags have allowed physical retailers and online retailers to take the omnichannel route. 

From the snack section of Walmart to the jewelry counters at Tiffany’s, physical retailers with the help of technology are thriving. 

Here’s how technology will further help in the resurgence of physical brick-and-mortar stores.

Digitization of brick-and-mortar stores

Jennifer Hyman, CEO and founder of Rent the Runway says, “In order for a brand to survive, its physical presence will need to offer something unique yet complementary to its mobile experience. Without a mobile-first approach, a seamless user experience across devices, and a digitally literate workforce, every day is a missed opportunity to be the disruptor, and not disrupted.”

Most shoppers review trends, customer reviews, and pricing online to compare with other brands on their mobile phones before they visit a physical store. 90% of in-store shoppers use their smartphones to look for coupons and product descriptions and specifications.  

Retail Dive’s survey explains that Gen Z and millennial shoppers cannot distinguish between the online and physical stores and thus want an integrated experience.

This focuses on the importance of the need for an omnichannel shopping experience. Although several physical retailers and eCommerce brands are thriving without expanding their digital and physical base, brands that have established both the obvious platforms have succeeded far more successfully. 

According to a survey by JLL Retail, “digital-native brands are expanding their presence into brick-and-mortar stores across the country, with plans of 850 more stores in the pipeline over the next five years.” 

Casper, an eCommerce brand that delivers mattresses straight to the customers’ doorsteps opened up seven stores and plans to open 200 more within the next three years.

Digitizing a physical store has benefitted retailers hugely: 

  1. Convenience, letting consumers shop through any medium at any time.
  2. Access to a plethora of products (both online and offline).
  3. Capacity to research and compare products, pricing, and availability through different channels at ease. 
  4. Ability to amalgamate social media channels such as Facebook, Instagram, and Twitter for marketing and promotion purposes. 
  5. Leverage mobile POS such as Apple Pay, Square Cash, Venmo, and PayPal. 

Online sales from brick-and-mortar stores in 2017 was more than half of pure-play eCommerce retailers (pure-play: $261.9 billion and brick-and-mortar: $179.9 billion). This insinuates that brands that blend their channels to have both online and offline presence are clearly winning.

Seamless shopping experience

Retailers that have both digital and physical presence with omnichannel strategies are gaining traction with customers. In a survey conducted by HBR, 73% of 46,000 shoppers were found to use several channels across the buying journey. 

A traditional brick-and-mortar store can be a part of different channels to provide a smoother user experience such as a cashless check-out system, online platforms, seamless customer support using online and offline methods, and opening pop-up stores in favor of large stores with endless routes. 

One of the ways technology can revolutionize the age-old check-out system in brick-and-mortar stores is by leveraging a cashless/touchless check-out system. 

eCommerce brands have the upper hand when it comes to zero waiting for check-outs. 

Beyond digital stores, offline retailers can provide touch points across smartphone apps and in-store digital tools (price-checker, touchless check-out system, interactive catalog, and virtual carts) to augment and improve the customer experience. 

Brands like Amazon Go, Walmart, and Kohl’s have restructured the entire concept of hassle-free check-out systems in their stores. The combination of QR Codes, scanners, and sensors have not only made the check-out process breezy but have also actively curbed theft and enabled seamless inventory management. 

Customers can just walk-in, grab their items, and exit by paying either through their digital wallets or using the store’s QR Code-enabled payment option. Their purchases are automatically tracked when they walk out of the door. 

Successful retailers are like an affluent synthesis of a fast-food drive-in and a hotel concierge. Several retailers provide a variety of humanless interaction experiences such as “buy online and collect in-store” or pick-up points or returning items via a delivery box. 

Shoppers can order for a cereal box at Target on their phone, for instance, drive in through the parking lot and purchase the product directly. 

Customized shopping experience

Even with all the technological improvements and advancements, eCommerce brands cannot provide personalized shopping experience as well as brick-and-mortar stores, which customers crave. 

This kind of excitement and engagement is what continuously attracts customers to physical retailers. According to Retail TouchPoints, during the holiday season of 2018 96% of customers did at least a part of their shopping in-store, thanks to the festive decor and ambiance of the store.

Regardless of this advantage that physical retailers have over online retailers, one cannot ignore the fact that online retailers continue to garner more customers because they offer personalized customer experiences. 

Walmart has rolled out special shopping carts to measure temperature, heart rate, and grip strength to provide a better experience and to also locate and sense frustrated, angry, and stressed customers. 

L’Oreal has announced a collaboration with microbial genetics company uBiome to “deepen (its) research into the skin’s bacterial ecosystem in order to develop more personalized skincare solutions for its shoppers.”

Research by HBR shows that customers who had the best shopping experience spent 140% more than those who had a bad or less-than-great shopping experience. 

Brick-and-mortar stores can amp their customer experience by leveraging technologies such as beacons, QR Codes, big data, and AI to cater to their customers based on their personalized choices. 

Studies also found that a subscription-based business also worked really well. 

A dynamic QR Code can be used multiple times to change the agenda of the campaign, set different deals for different times of the day/week/season, and utilize it for contactless payments. 

A dynamic QR Code, when deployed for personalized customer experience, can be used to send out coupons via direct mail or flyers/brochures, contactless payment, and in-store & digital-only exclusive offers.

Informative insights about the product

A recent survey reports that digital signage is 34% more effective at promoting products than their static counterparts. As screens, shoppable packing technologies, and sensors are improving rather swiftly; retailers are now able to provide their customers with a plethora of information about their products.

Shoppable packing technology such as smart tags and labels can connect smartphone-savvy consumers to brands and read out real-time information about the product, including the origin of the product, manufacturing, and processing. 

Walmart was one of the first brands to incorporate this technology. 

As more and more brands are joining the bandwagon to unlock the potential of big data throughout the retail industry, the key center for collecting information to provide the best for their consumers will succeed. 

One such fundamental advantage against disruptive digital upstarts will be the amount of data collected to alter purchase decisions made by consumers every day within their walls. 

Bray says, “A part of this resurgence is due in part to brick-and-mortar retailers taking advantage of customer data and putting it to work to help drive in-store traffic.” 

Experiential shopping

Leaders of brick-and-mortar stores are benefitting from a new type of freedom as they face less pressure to perform in the traditional sense. This has given birth to a new kind of innovation – an experiential shopping experience

Lululemon is offering community building experiences – like free yoga classes – or outdoor retailers like REI and Tiffany’s building rock climbing in the walls and offering breakfast counters, respectively, just like the infamous movie, to elevate the shopping experience.

Stores these days offer an opportunity to get out of the house, touch and feel the products, interact with the community, and let consumers experience the product. 

According to Deloitte, retailers should be mindful of customer services and in-store shopping experience, both in-store and online. 15% of millennials have halted an online purchase, and 21% stopped an in-store purchase three to five times over the past year because of lousy shopping experiences. 

With a number of different options available to the consumer regarding buying of a product, a subpar shopping experience can turn even the most loyal fan away. Experiential retail is thriving because offline stores are providing experiences that most online stores can’t offer. 

Macy’s, the retail giant, is testing out new concepts for its physical retail stores. After acquiring Story, an NYC-based “narrative-driven” store that changes its theme and product selection regularly, Macy’s is rolling out the initiative in 36 of its outlets nationwide. Its first theme, Color, features a “rainbow of curated, giftable products” along with workshops and events from partners like MAC Cosmetics, Levi’s Kids, and Crayola.

Conclusion

Brick-and-mortar stores are unlikely to disappear from the face of retail any time soon. They offer a distinctive, treasured experience to consumers, and can be a wealthy data-information center in the near future invariably, which eCommerce brands can’t provide. 

With the constant evolving of technology and leveraging big data, statistics, and consumer behavior, retailers of all sizes are becoming unique, and are striving to provide a one-of-a-kind experience to their shoppers. 

In a market where brands are constantly fighting for consumers’ attention, being different has never been more critical. Whilst brick-and-mortar stores may seem “old school,” they are proving to be rather efficient channels for brands to reflect their brand personality and value. 

So, how can retailers join the winning team and become a force of the next wave of retailer technology? By investing in the right technology and prioritizing their needs – think smart and think digital. 

Monika Adarsh

Currently donning the Researcher's hat. Talks to himself.