February 9 2012|06.00 AM PST

How Brick and Mortar Can Adapt

Category: Mobile, Payments, RetailTags: , , , , , , , , ,

by Alex Gutow on February 9, 2012


The first Cyber Monday was in 2005. In 2011, it became the highest gross online shopping day in U.S. history, reaching $1.25 billion. Even in the midst of recession, online sales from Q1 2009 to Q1 2010 rose in some demographics as much as 18%. Between Q1 2010 and Q1 2011, it was up 23.8%. (Source)

The rise of online shopping has taken a toll on offline retailers though. They have either gotten on board with the consumer’s desire to buy online anytime or have lost their hold on their market. In general, retailers have fervently taken hold of the opportunity to sell online. Many brick and mortar stores now function interactively with the company’s online storefront. Best Buy, for example, allows customers to order products online and have them delivered to a local store for pick up to avoid shipping charges and additional wait time. Gap allows customers to buy online, delivers them to the customer’s home, and then accepts returns at their offline locations. By having offline and online channels work together, retailers are able to deliver better convenience to their customers by allowing them to shop whenever and wherever without the worry of shipping costs or returns.

Digital Damage
Online sales have taken their toll on brick and mortar stores. The gravestone of Borders Bookstores is now reads “1971-2011,” which is attributed to the failure to adapt to online retail. Meanwhile, the ultimate online competitor, Amazon, has continually been able to expand its online sales into new territory. In a similar story, iTunes launched in January of 2001 with the first iPod being released in November of the same year. Tower Records filed for bankruptcy in 2006 due to online music sales and the popularity of this new competitor.

The Case for Stores
Nonetheless, brick and mortar stores offer more services, easy returns of faulty products, and customer service with a human touch. They allow the customer to try on clothes, observe actual colors in natural light and experience the products hands-on. In addition, shopping can act as a social experience and some people value actually leaving the house. If willing to adapt, brick and mortar stores will always have a place in the American landscape. However, to survive, they need to absorb the reality of online shopping into their commercial outreach to customers.

To start, retailers need to accept that most customers want to shop online now and want to do it with ease. When it comes to online shopping, customers are impatient and will not hesitate to leave a site if they can’t easily find what they need. Online sites should allow customers to easily find what they need, view product information and reviews, and quickly and safely make a purchase. Additionally, more and more online shoppers are turning to their mobile phones when they want to shop on the go. Retailers need to prioritize developing a mobile site and/or native app if they want to stay competitive and make sure they keep it updated as new technologies are released.

Once the website is in place, it’s time to connect the two channels. One downfall of brick-and-mortar is the limitation on inventory. However, by combining these two channels, retailers can please their customers even when they’re out of the item or color in question. Kohl’s uses in-store kiosks that allow customers to browse online for specific items that they cannot find on-site, ensuring customers always feel like they found what they were looking for and quietly preventing them from taking their business elsewhere. Land’s End is taking advantage of this technology by situating itself within 300 Sears’ locations around the U.S. This is allowing the online and catalogue distributor to include personalized services for their customers. If the particular location does not have a specific size or color, there is an online kiosk that connects them to landsend.com and a phone that connects them to a live operator. This allows customers to touch, feel, and try on the clothes and then order what they like online.

Finally, retailers must automate their stores more to make it convenient for customers to actually venture in store and leave feeling pleased. Starbucks has created an app that allows for purchasing specifically at their stores, a kind of electronic gift card. The Starbucks’ employee can scan a phone with the app and the user’s pre-paid account is charged, shortening the checkout time and allowing customers to get their frappuccino faster. Technologies like Square can also turn any smartphone into a cash register. When paired up with an iPad, a store cashier has a roving cash register that can be used anywhere in the store or alleviate congested waiting lines.

While online shopping and new technologies have certainly changed the way we do business, it does not mean the end of brick-and-mortar. By embracing new trends, retailers can create hybrid experiences both online and offline that will allow them to thrive in this changing retail environment.

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