As modern shoppers gain access to new technologies and shift what they want to spend money on, retailers and online companies both have had to change their strategies and adapt. The result, despite headlines of store closures, is a merger of digital and offline shopping that delivers a better experience and, therefore, is good news for consumers.
As online goes brick-and-mortar, traditional retailers shut down
Brick and mortar is still the commerce king, accounting for more than 90% of total retail sales. But it’s e-commerce that is winning the growth prize, expanding 8-12% in Q1 2017 vs. 2.8% for brick and mortar. The big driver behind that growth is mobile. People typically spend 5 hours a day on their smartphones, with 90% of users whipping out the devices in-store while shopping. Furthermore, mobile devices have enabled companies like Amazon, Instacart, Airbnb, Starbucks, and Uber to succeed in the cloud.
As more and more companies leverage the usage trends to their advantage, Internet direct-to-consumer companies are opening physical stores to expand and become more accessible to shoppers. Examples of companies trying the approach include Amazon, Blue Nile, JustFab, Bonobos, Athleta, Warby Parker, ModCloth, and Casper. These businesses are able to take what they’ve learned from being pure-play online and transfer it to their physical locations, giving customers the human contact they often still want—as many as 70% of shoppers indicate that they’re looking for interaction in physical retail.
The movement of online stores into physical locations hasn’t boded well for many traditional retailers. Household names like Macy’s, Sears, Kmart, and J.C. Penney have suffered and closed stores, primarily because their business model relied on physical expansion. Investments in online came too late, and they weren’t able to take advantage of the cost savings and customer loyalty providing an online option can bring. Employee morale and the customer experience both subsequently suffered, with margins plunging as the companies excessively cut prices to try to compete.
Mobile dominates, and new apps are key
As shoppers take advantage of the ease and convenience of shopping and researching by mobile, both traditional and online companies are rethinking the apps they’re creating. Successful programs are…