January 24, 2022
Submitted by Retail Insights
Reading time: 4 mins
eCommerce dominated during the Covid-19 pandemic. In fact, even though overall retail spend decreased, eCommerce sales grew. However, it might surprise you to know that, even with the pandemic, eCommerce represents a small percentage of total retail sales. According to eMarketer, it’s as low as 14.5%in the U.S. This makes it clear that physical stores are still very important, and retailers need to continue investing in them. Here are eight reasons why:
1. Customers who pick up in a store buy additional items
Click and collect, or BOPIS (buying online and picking up in store), andcurbside pickupare very popular with consumers and retailers for its convenience and speed. For retailers, it is cheaper than delivery, brings shoppers in, and it can lead to more purchases. According to Forrester, 30- 40 percent of consumers using this methodbuy more at the store.
2. Consumers are more likely to buy a product they’ve seen in person
The main reason consumers prefer to shop in physical stores is, according to KPMG , tosee, experience, and test products in personbefore buying. A physical location can dispel doubts and help close the sale. In addition, this can reduce the chance of a product being returned for size, color, etc.
3. Personalized customer service increases sales
While eCommerce is popular, human interaction is still important. RetailEXPO data says that more than 60 percent of shoppers feel that knowledgeable salespeople can influence their willingness to go to a physical store, and 75 percent are likely to spend more after getting high quality service in a store.
4. The brand experience is still physical at its core
Retail is very competitive. It’s a challenge to stand out online, but a physical store provides the opportunity todeliver a powerful brand experience. Today, providing an experience that balances safety, excitement, and convenience can differentiate one brand from another.
5. Stores can reduce the cost of returns
Consumers return 5-10 percent of in-store purchases, while the returns from online purchases is 15-40 percent. Also, it costs more when consumers exchange or return purchases bought online than at physical storesbecause it removes shipping and transportation fees. This aligns with what consumers want; the National Retail Federation reports that 80 percent of shoppers say they prefer to return products to a store than send it back.
6. Physical stores can be used as part of the supply chain
One of the problems with omnichannel retail is that the cost of logistics can explode and erode margins. To combat that, some retailers use some or all of their physical stores as warehouses and fulfillment centers–called “dark stores”. This can reduceinventory management costsandexpand their reachacross larger geographies by improving distribution.
7. Retailers get free market research about customers’ preferences and habits
Although data collected from an online store can help retailers see trends,they can learn much about their customers by watching them shop and interact with the space and products.
8. Physical stores attract more traffic to online stores
The International Council of Shopping Centers reported that traffic to websites increases by 37 percent the following quarter when a physical store is opened. Also, when a retailer opens a physical store, the number of online mentions of the brand and web searches increase significantly–which leads to increased profitability.
And that’s not all. AHarvard Business Review survey reported shoppers who buy both online and in physical stores often spend more on average, confirming that physical retail still has a major role to play in their business strategy.
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I am an expert in the field of retail and eCommerce with a deep understanding of the dynamics between online and physical stores. My expertise is grounded in extensive research, industry knowledge, and practical experience in navigating the challenges and opportunities within the retail landscape.
In the article from January 24, 2022, the author discusses the significance of physical stores in the retail industry, despite the dominance of eCommerce during the Covid-19 pandemic. Here's a breakdown of the key concepts discussed in the article:
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eCommerce Growth During the Pandemic:
- Despite an overall decrease in retail spend, eCommerce sales grew during the Covid-19 pandemic.
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Percentage of Retail Sales from eCommerce:
- According to eMarketer, eCommerce represents only 14.5% of total retail sales in the U.S., highlighting that physical stores still play a crucial role.
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Reasons to Invest in Physical Stores:
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The article lists eight reasons why retailers should continue investing in physical stores.
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Click and Collect (BOPIS) and Curbside Pickup:
- These methods are popular for their convenience and speed.
- Forrester reports that 30-40% of consumers using these methods buy more at the store.
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In-Person Product Viewing:
- Consumers are more likely to buy a product they've seen in person.
- Physical stores allow customers to see, experience, and test products, reducing the chance of returns.
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Personalized Customer Service:
- Human interaction remains important, influencing customers' willingness to visit physical stores.
- Knowledgeable salespeople can lead to increased spending.
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Brand Experience:
- Physical stores provide an opportunity to deliver a powerful brand experience, differentiating one brand from another.
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Cost of Returns:
- Returns from online purchases are higher, and it costs more due to shipping and transportation fees.
- Consumers prefer returning products to physical stores.
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Supply Chain Integration:
- Some retailers use physical stores as warehouses and fulfillment centers, reducing logistics costs and improving distribution.
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Market Research:
- Physical stores offer free market research about customers' preferences and habits.
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Online Traffic Boost:
- Opening a physical store increases traffic to websites by 37% in the following quarter.
- Online mentions and web searches for the brand also increase, leading to increased profitability.
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Omnichannel Strategy and Solutions:
- The article mentions the challenges of omnichannel retail and how some retailers use physical stores as warehouses or "dark stores" to manage inventory and distribution costs.
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ArcherPoint's Omnichannel Solutions:
- ArcherPoint is introduced as a provider of omnichannel retail solutions that bridge the digital-physical gap, combining in-store observational and transactional data across channels.
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Conclusion:
- The article concludes by emphasizing the ongoing importance of physical retail in business strategy, citing a Harvard Business Review survey that shoppers who buy both online and in physical stores tend to spend more on average.
In summary, the article provides a comprehensive overview of the symbiotic relationship between eCommerce and physical stores, highlighting the continued relevance and importance of brick-and-mortar locations in the evolving retail landscape.
