RETAIL & FCMG

The merger of online and offline retail

With the news that an enormous company like Toys’ R ’Us is closing all its stores and that major brands like Best Buy, Macy’s, Abercrombie and Fitch and similar are in the process of shutting down their numerous stores, no one is surprised to find out that online sales are on the rise.

E-commerce has grown exponentially in the last couple of years and it is not hard to imagine why - the possibility to buy anything at any time from any place makes shopping easier and more convenient. Not having to go to a store, not having to deal with the hassle of big crowds and having things delivered to your front door are just some of the reasons why many people choose to shop over their computers or from their phone. Business Insider reports that online sales “will account for 17% of all US retail sales by 2022, up from a projected 12.7% in 2017”. However, despite the advanced technology and the perks of buying from the comfort of your own home, over 90% of all retail sales in the US happens in a physical store. The reason for that is quite simple, just think how many times you wanted to buy something online, but you were not sure about the size, or the quality, or the feel of a product?

Today many people do their research online, they see what is out there, compare prices, read reviews but when it is time to make a purchase they head to an actual store. Trying on, touching and testing products, the social aspect of going to the store, the feeling of satisfaction when you walk out with a bag in your hand is something that makes people choose brick and mortar retail over e-commerce.

It is very clear that the future of retail is in a merger of online and offline shopping. We can see that in the example of Amazon, one of the biggest e-commerce companies. Amazon has grown tremendously in the last years and became number one e-retailer in the US and Europe. But even the ruler of online shopping realizes the trends of the future and the inability of further expansion without the physical store. It is why Amazon spent 14 billion dollars on buying WholeFoods, a supermarket chain specializing in organic food, and its 500 physical locations. They have also opened several physical bookstores and cashier-free convenience stores. Many other e-retailers are following the same logic and are opening physical locations to create a personal connection with their customers. On the other hand, the major brands like the ones mentioned above were forced to close their physical stores because they relied solely on the physical expansion as their model of business. Additionally, they did not invest enough and on time in their online sales. What brick and mortar retailers need to do is increase their online presence, reduce the cost of shipping and have an option to pick up online orders in a physical store. 

 

For all brands to stay relevant in today’s world they need to see the benefits of the omni-channel services and offer their customers a shopping experience both offline and online. That is why soon there will be no difference between e-commerce and brick and mortar businesses. One brand will have many ways of doing business and their success will be based on the ability to fulfil the needs of their customers which is to have a choice to do their shopping online and in a physical store.   

Author: Melita Ferjanic

Contact: mferjani@s-gsg.com