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When the pandemic hit, almost every aspect of life was virtual. Work, socialize and, of course, go shopping. Before COVID, e-commerce was already an integral part of our lives. But, the global shutdown has taken online shopping to a new level, with online retail exceeding $ 4.2 trillion. And with many stores set to close, it looked like the line would be the way of the future. Surprisingly, this is not the case. Retailers across the country plan to open more stores than close in 2021, as it was found that brick and mortar actually feed e-commerce success.
A new report found there had been a 40 percent increase in store opening announcements year-over-year despite numerous business closings. This is partly explained by the ability of companies to transfer part of their activity to online sales in order to create a strong position in the market, with growing e-commerce from 11% of retail sales in 2019 to 14% in 2020. These statistics are significant, according to experts like Jose Nino, vice president, global e-commerce and digital strategy, US Polo Assn. Global licenses (USPAGL). Why? Well, the retailers who can optimize both online and offline experiences have the best opportunities for sustained growth going forward.
A 2019 survey of the International Council of Shopping Centers found that local store openings were driving search volume online for that same region. Likewise, the search volume for said designated region decreases with store closings. Often referred to as ‘bricks for clicks’, the study found that opening a physical location resulted in an average 37% increase in overall web traffic.
Additionally, numerous case studies show the relationship between new store openings and their impact online within the walking radius of the store. Examples include improved conversion, average unit retail sales, and retention rates. USPAGL has a global retail footprint of over $ 2 billion through e-commerce and over 1,150 stores in 170 countries. They too have witnessed an increase in website traffic in the new territories where they have opened.
“When people have the opportunity to view products in the store, they gain a better understanding of some of the product features that are difficult to articulate online,†Nino told me. “They can smell the product, understand the breathability of the fabric, assess how tight a slim fit can be, and so on.
Dick’s Sporting Goods also recently announced the construction of new locations as well as House of Sport experiential stores. Dick’s Senior Director of Technology for Stores and Omnicommerce JP White Explain that physical stores were essential to Dick’s digital presence and success. Brick and mortar locations add an element of convenience to the buying funnel. This was especially true during the pandemic, as stores functioned as distribution centers and a safe way for customers to collect and return products.
“By having a store near one of your virtual customers, you take a lot of the guesswork out of their purchase,†Nino said. “In many regions, we offer a truly omnichannel experience where customers can pick up and return their purchase online at a local store faster than delivery. All of these enhancements further support the ‘bricks get clicks’ narrative.
In addition to higher conversion rates, bricks that generate clicks generate higher average order values. When customers know they can return merchandise to a local store, they are more comfortable filling a larger basket with orders, which also generates higher margins. And the retail business doesn’t have to absorb the return and overhead costs.
It comes after the retail industry saw a boom in direct-to-consumer (D2C) sales activities during the last years. This “retail reset” has lasted for the past decade, resulting in store closures that have dramatically reduced the physical footprint of retail. But, in the future, it looks like brands with a strong omnichannel presence will not only experience an increase in conversion, but will have a more productive post-purchase experience.
For example, this year’s Prime Day was relatively disappointing, with an announced growth of 6 percent compared to the last event. Meanwhile, Amazon’s competitors released huge double-digit lineups that week. Retailers like Best Buy, Target, Walmart provided the shopping convenience and because of that released much stronger rosters than Amazon.
“I think it’s a sign of things to come,†Nino said. “The future of retail will be defined by those who perform omnichannel best both from a back-end (logistics and operations) and front-end (consumer experience) perspective.”
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