Retailers need to be focusing on optimizing store portfolios, while simultaneously improving their online presence.
Will online shopping squeezes brick-and-mortar stores?
Traditional retailers need to select the best sites for stores, determine the optimal number of locations for each market, keep up with consumer expectations of what the in-store experience should be. However, consumer aren’t coming to stores for the prices or the selection as they can usually find better alternatives to both online.
China’s online retail market, which has surpassed that of US as the world’s biggest, and will continue to grow rapidly to a level threatening brick-and-mortar stores in next few years. According to the official government data, Chines consumer spent US$300 billion last year, 13% per cent more than the US. This figure makes China the biggest market for online retail in the world.
Based on getchee market research, online sales now accounts for approx. 10 per cent of total retail sales but anticipates it will grow 30-40 per cent a year in China market. However, that means that 90 per cent of retail sales are still happening where sales have taken place for hundreds of years: Physical stores, retailers have physical presence to engage with consumers.
Why personalized retails is the future of brick-and-mortar stores?
Consumers prefer to shop in physical stores as it allows them to have a sensory experience – they can touch and feel product, immerse brand experience, and interact with sales associate. Many retailers are taking a page from their traditional compositors by offering an in-person shopping experience that can’t be mimicked on a tablet or smartphone. This heightened focus on in-store experience could be a sign that the retail industry definition of successful store is changing.
Key benefits for retailers and customers
1. Discover customer preference to offer the right product mix, reduce inventory distortion and raise brand awareness.
2. Draw attention to products using catalysts, like mobile payment, phone apps, or special promotion program; increase retention of existing customer and get customers to try new products.
3. Give customer a reason to shop in-store by surpassing the online experience with more relevant product information, interactive self-service stations, and expert insights from sales staff – delivering an immersive brand experience.
4. Allow customer to shop the way they want, using a combined channels (in-store, online, mobile and self-serivce) accommodating their busy lifestyle.
5. Making personal connection by sending an email or SMS wishing them a happy birthday, congratulation on an anniversary, or gifting a beverage 0 making them feel special.
The future of retail stores
So instead of concentrating solely on one channel, retailers need to be focusing on optimizing store portfolios, while simultaneously improving their online presence.
Retailers also need to adjust the way they view the value of their physical stores. When online shopping exploded, retailers determined the impact to performance of a store based on its sales numbers. Brick-and-Mortar stores need to be viewed and help consumers discover new products and test ones they have seen online – regardless of where the actual transaction takes place.
Brick-and-Mortar stores capture sales, but they also create value by driving online sales. This means the value of a store for both consumers and retailers is greater then the sales captured within them.