The Decline of Brick and Mortar Sales

Last year, retailer’s survival was pushed to the limit as they were forced to pull rabbits out of hats in an incredibly short space of time, just to keep their doors open. Faced with the realisation of how behind the curve many businesses were in retail technology business unusual, pushed retail innovation to the brink. This may seem like the understatement of the year but to be reminded is to understand the tenacity and resilience of retailers who through innovative change, are turning challenges into opportunities.

The reality check as reported in Business Insider detailed how more than 8,000 U.S. stores closed last year from H&M, to Macy’s, Fossil, and Gap – with experts predicting 10,000 possible closures in 2021. Starbucks alone closed 400 mall-based locations choosing to invest in drive-thru and pick up store formats instead, while other retailers that didn’t close filed for bankruptcy including J Crew, Nieman Marcus, and JCPenney. Closer to home well-known names around for decades such as Edcon filed for bankruptcy, Time Freight’s business came to a halt and prominent The Kitchen in Cape Town closed its doors.

That said, in a recent Forbes article [May 2021] it was reported that in-store retail is bouncing back based on the understanding that there is still uncertainty about the outlook going forward. The key contribution to this turnaround is where major retailers have adopted an omnichannel approach that integrates online sales and store locations for comparison shopping, purchases and returns. Highlighting the importance of the close link between in-store and online sales channels with the prediction that this sales strategy will continue to generate demand for physical store locations.

“Imagine a world where the fluidity between online and offline is so seamless we no longer think about them as separate channels. In-store assistants will be as informed as Google search. They will understand customers as if they were on a first-name basis, access to inventory will be seamless regardless of location and same day delivery will be standard,” said Melissa Gonzalez, Group CEO The Lion’esque Group

A Deloitte’s opinion piece explained that over and above tactical and operational considerations critical for retailers to consider when it comes to sustaining brick-and-mortar, is the need to re-examine who they are as a business, asking the following questions. How has the customer evolved after the crisis and what are their expectations, needs, behaviours and priorities? Does the business need to evolve the value proposition accordingly? What are the key best-selling products and high-interest categories customers care about today and what new categories, services and business models are tabled for consideration? And lastly, what is the impact on the store channel and its role in customers’ lives?

“Brick and mortar retailers have always had to inventively bob and weave well before the pandemic side-swiped consumer behaviour that set a trajectory for a new set of shopping expectations. The need for change was already shifting on the understanding that retail innovation was headed for a part-physical, part-digital experience at some point as giants like Amazon set warning bells ringing way back when. By being forcibly thrown out of a perceived comfort zone a new operational space was created for innovative brick-and-mortar retailers to find their fit,” said Mike Smollan, Chief Growth and Innovation Officer, Smollan.

Nowadays, consumers are on the hunt for a shopping experience that provides for engaging, ease of purchase moments that offer a wide variety, deals and discounts and ultimately excellent customer service.  With that in mind, Deloitte’s offered the following four challenge orthodoxies to consider as retailers adopt a ‘be prepared to pivot’ approach to running retail stores by – creating emotional loyalty not just transactional loyalty and recognizing returning customers in-store the same way one does online; selling different things, differently by offering curated subscriptions, personal shopping services and virtual designs to validate product concepts; re-thinking a stores purpose as a showroom or by changing the ratio of back-of-store to front-of-store to support greater online fulfilment needs or use store space to set up a call centre or virtual shop for customers and lastly, be digital first, even in-store and beyond a website and an app, by livestreaming shopping events or continuing to improve contact-less payments.

Forbes magazine (August 2021) suggested that one could speculate with the boom in ecommerce that traditional retail is dying, however there are a significant number of consumers who have always preferred to see, touch, and feel products before purchasing them. As brick-and-mortar evolves to hang on to market share, retail marketing needs to evolve with it, with a few proposed areas for consideration going forward – omnichannel marketing is more important than ever across every customer touchpoint; in-person experiences incentivise people to shop such as roadshows and pop-ups; there is a growing focus on feature marketing as opposed to traditional brand marketing and the fact that physical stores offer opportunities to build loyalty by making the store a destination that brings brand attributes to life.

Economic analyst for BRG Keith Jelinek said, “There has not been a better time to rethink how to go to market more efficiently, capture market share and be a leader in the new world that lies ahead to not only survive but to thrive.”

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