We are constantly reminded of the growth of the internet of things and performance of ecommerce. From a consumer’s perspective, shopping has become more convenient than ever. No matter what product or service you might be looking for, whether it be a car, toothbrush or groceries, it is only a few clicks away. For suppliers benefits include the possibility to track consumer buying behavior, increase reach, and also customize offers using artificial intelligence.
Although this is all true, the performance of brick-and-mortar stores is still strong. In fact, even with the strong online focus of today’s society, e-commerce still only accounts for less than 10% of total retail sales and is expected to remain below 20% within the upcoming 5 years. (S. Dennis, 2017)
Some retail locations do struggle and some chains have pulled back, yet this is not unusual at all. Competition and taste change. The “retail apocalypse” often mentioned in the media, as a result of ecommerce, is not representative of reality. We should consider the failure to innovate on the part of most traditional retailers, which has shifted customer preferences and market-share grabs from transformative new models. Physical retail is not going away, though digital disruption is transforming most sectors of retail significantly. Consequently, ‘good enough’ no longer is. Mediocre retailers used to be protected by the scarcity of product and pricing information, assortment ranges, limited geographical competition, and the inconvenience and waiting times bound to product delivery. E-commerce changed all of these factors, and thus expose the weaknesses of many retailers’ business models.
A truthfully transformative and disruptive factor in retail is the fact that most customer paths for transactions which end in physical stores start through a digital channel. Digitally-influenced physical stores sales are much greater than all of e-commerce. Many stores fail to realize this has caused them to waste effort and expenses to build strong online capabilities at the expense of effectively running their brick-and-mortar stores and the overall shopping experience.
References:
S. Dennis (2017) Physical Retail: Definitely Different, Far From Dead. Retrieved 10/10/17 from https://www.forbes.com/sites/stevendennis/2017/07/06/physical-retail-definitely-different-far-from-dead/#4d3439685a28
T. McGee (2017) Deflating The Myth: Why Physical Retail Is Very Much Alive. Retrieved 10/10/17 from https://www.forbes.com/sites/tommcgee/2017/09/19/deflating-the-myth-why-physical-retail-is-very-much-alive/#fdaa2d973d1a
