There’s no doubt that that Internet has changed the business of retailing. Thanks to consumers’ proclivity for pre-purchase research and the availability of online commerce, retail growth is no longer dependent on brick and mortar expansion.

In fact, expanding physical stores can negatively affect a retailer’s bottom line because online sales are eradicating revenues previously used to offset the added expenses associated with expansion.

Adding more retail locations has long been the traditional growth plan for retailers.  Doing more of the same, even if that which was done proved successful in the past, is no longer a recipe for success.  However, transitioning to online sales may not guarantee success either.

More than half of consumers now research their retail purchases online. This means in-store purchase decisions are becoming less frequent as are, thanks to online shopping, physical visits to the store itself.

Is Online Shopping The Solution?  

At first glance, the number of store closings across North America and the UK would suggest that there’s declining value in brick and mortar stores. In the USA, fashion retailer Gap has closed more than 250 locations and retail giant Walmart is opening new, smaller-format stores. In the UK, electronics stores, the darling of the retail world, have seen a 20 to 30 percent reduction in physical footprints.

Fewer stores – or smaller footprints – are enabled by “virtual space,” which is the space required in a physical footprint to generate the sales achieved through online shopping.

There’s no limit to the number of online stores or products that can be made available, which at first may seem to be an opportunity.

The overabundance of virtual space, plus the new ease with which individuals and businesses can build and maintain online stores, has created competition greater than that found in the physical retail world.

Transferring traditional sales operations online has not proven to be a sure-fire profit generator for retailers.

Is There a Role for Brick and Mortar Stores in Today’s Economy?

While the merits of online retailing are being debated, a return to expanding brick and mortar stores may not be the answer.

The answer lies in re-inventing the customer experience across all channels and ensuring that the experience is inclusive across all those channels: Physical store, online store, social media, billing, customer service, product support, content marketing, loyalty programs, etc.

The physical store may no longer be the center of the customer’s experience but it can play a critical role towards fostering greater customer satisfaction and advocacy.

360 Degree Retailing: Reassessing Brick and Mortar Stores

The answer lies not in the store’s size or window dressing but how customers rate the physical transaction and experience towards their overall impression of the brand.  Retailers must ask what role the retail store plays in the customer’s decision-making process. How does the store – or the customer’s experience within the store – affect interactions with the consumers they engage outside the store?

In other words, focus on building a 360 degree customer experience that does not rely on any one channel, but includes them all. Here are few strategies that you may find helpful:

1. Facilitate in-person meetings or experiences for those who purchase online or for customers who engage with other customers in social media.  For example: A craft store may offer in-store workshops specifically for those who transact online; a music store or electronics shop may host live performances for those who are members of the site’s online fan forum; a wine retailer can offer in-house or in-store wine tasting events for those who prefer to purchase online.

2. Create inspirational or educational events within the store that foster stronger relationships with customers, who may choose to purchase online in the future. For example, consider a bike shop that offers bike maintenance lessons each spring.

3. Host events outside the physical store: The Running Room, a popular and growing Canadian retailer of active wear including running shoes, coordinates free local running and walking clubs where customers can train together and sponsors races for customers and non-customers alike.  The local stores become a connection point for offsite social engagement and exercise.

4. Hire and promote an industry expert whose office is located in the physical store. For example, a furniture store may hire and advertise a popular interior designer who is made available exclusively to existing clients or selectively to prospects whom the store engages with in social media. The designer could make house calls, offer “staging services” for those selling their homes, etc. In other words, offer unique value in-store that cannot be effectively delivered online. Such a practice will develop stronger personal relationships with prospects and customers and possibly add additional revenue streams that can only be earned through the physical store.

5. Offer free in-store consultations and support for those who purchase and return products online or for those who need added support.  Giving customers the option to engage with an expert will decrease returns, reduce negative online publicity, and increase loyalty.  Stores like Best Buy and Staples are embracing this tactic well with their “geek squads” that offer in-store technical support or home and office support visits. This added service increases the likelihood of online purchases because it instills confidence in long-term support.

Conversely, transactions and engagements that occur in the physical store or at hosted off-site events should be designed in such as manner as to encourage reciprocal online engagement.

For example: The Running Room offers a private online member forum for those participating in its running clubs;  a local restaurant I frequent posts pictures of wine-tasting events on its website, allowing those who attended the opportunity to tag themselves and share the branded photos across their social networks.

Sensei Debates

Is the value of brick and mortar stores diminished with the rise of online shopping?

Sam Fiorella
Feed Your Community, Not Your Ego