Retailers who were once slow to embrace digital technologies to attract customers are now racing against time to stay relevant. As COVID-19 swings and flows with each new strain and subsequent closures, so does foot traffic in traditional stores. The retail industry has never faced such turmoil as it did in March 2020. Profits of non-core merchants dwindled, and many businesses had to go bankrupt and close stores. But even before the virus hit, in-store traffic dwindled over the years while e-commerce took over the major retail holidays. However, bricks and mortar are totally starting to make a comeback. Looking at the recent retail report from CBRE, Q3 2021 saw a positive uptake of the retail segment for the fourth consecutive quarter, with improvements in each of the asset classes over the course of the quarter. Taking the phrase “If you can’t defeat them, join them” at heart, bricks and mortar realized they needed to make a friend out of their online foe.
Physical retailers may have refrained from e-commerce in the past, but those who want to stay flexible in the market are relying on digital technology to drive sales. E-commerce has been one of the many aspects of the economy that has accelerated the Covid-19 virus, as data from IBM’s US retail index revealed that the pandemic has progressed rapidly on the projected path from physical stores to e-commerce by five years. Thanks to lockdown restrictions, global e-commerce sales have jumped to $26.7 trillion by May of 2021. As much as we can all hope the virus grip will falter so we can finally return to what was before, it’s clear that online activity is not. t go anywhere.
Brick-and-mortar retailers have finally realized that they need to “reimagine their omnichannel approach to create a distinct customer experience that recovers faster from the pandemic,” according to a McKinsey study. For those unfamiliar with the phrase, “omnichannel” (sometimes called omnichannel) integrates different ways of shopping for a seamless buying experience regardless of whether the consumer is shopping online, over the phone, or in a physical store.
Cash me off the sidewalk
One of the most prominent examples of retail aversion to technology lies in the appropriate shift of technology in the grocery sector. Before the pandemic, the grocery market largely avoided e-commerce. Digital orders made up less than 5 percent of total supermarket sales. Of course, that all changed in 2020 when online demand skyrocketed and left a lasting impression. Online groceries are set to make up 21.5 percent of total grocery sales by 2025, which, according to a recent report, is about $250 billion and a 60 percent increase over pre-pandemic sales estimates.
When closings brought other markets to a knee, grocery stores never closed. Not only has the grocery sector benefited from their “core” situation to remain open, but they have also reaped the benefits of the shutdown. Dining in the restaurant was no longer an option, and people threw themselves into homemade food trends like sourdough entrees, “cereal” pancakes and dalgona whipped coffee. Cooking from home was the hottest trend, as there wasn’t much to do and social distancing made deliveries or grocery shopping favorable. So much so that grocers and other retailers are beginning to recognize the value of allowing consumers to order their products online.
The re-emergence of retail appears to be directly linked to the success of grocery stores, to the point that shopping malls with a grocery store are driving the retail revival. Fueled by a digital tailwind, the pervasive success of the grocery sector has drawn commercial investors to the grocery retail business. Owners with space in outdoor malls that include grocery stores filled 17 million square feet of it during the last quarter.
As businesses were closing left and right, retailers who wanted to stay afloat had to rethink the functionality of their empty stores. Stores became redundant space, and retailers with redundant space realized they could set some or even all of their square footage as the fulfillment center for their online orders. Of course, the idea was not limited to the onset of the pandemic, in fact, some malls were redirected to warehouses in 2017. But the trend accelerated when the shutdown forced retailers to reassess how they used their stores in order to ease the financial situation. brought about by the entire retail sector.
But bigger names in retail like Costco have taken that idea a step further by purchasing warehouses where they store their products. Mark said, “While most retailers still tend to rent out the shops where they sell products, more companies are calculating that they will save money in the long run and have greater control over owning the warehouse where they store and distribute their merchandise to customers online. “Morr The Wall Street Journal. Major retailers who buy rather than rent real estate tell us two things: One, that bricks and mortar intends to expand its online presence as a compliment (rather than competition) to its business model, and that it intends to do so for a long-term. Chris Bjornson, who leads the retail industry team at JLL, told Maurer that “Retailers who own the facilities generally view them as a long-term investment over a period of approximately 30 to 50 years, while those who rent them consider the approach of Five years. 15 years.”
The ongoing supply chain crisis is another reason why the relationship of retail to e-commerce and real estate go hand in hand. Inventory used to travel to many locations before finally getting to work. On the other hand, retailers make the process easier by integrating stores, warehouses, and websites into one place. Moreover, significant shipping delays come with an exorbitant price tag that is passed on to the consumer, so retailers who buy their storefronts and business center can be able to lower prices in the future and attract more customers… away from the retailers who have continued in renting out their space.
As dramatic as the store-to-store shift may be for every retail business, it may be too little, too late. Amazon had already gutted 25 dying malls across the country and was reportedly in talks with Simon Property Group to convert distressed Sears and JCPenney stores into fulfillment centers last April. However, there may be one digital machine that small retailers can throw away: live video shopping.
Live Streaming Metrics
What made brick and mortar obsolete could become a silver bullet for pure e-commerce, this introduces a human touch in a time of social hunger with direct shopping that simulates the store experience. Jessica Page of “Live video shopping works especially well for items of high importance” Retail Insight Network. “Customers tend to dump information and search websites for credible ratings and credibility. Without a concierge page, customers are often presented with a live chat bot, which is great for handling simple queries but lacks in more complex scenarios.”
Live commerce changed the retail landscape in China when it came to fray a few years ago, as its popularity exploded to the point that it became a new form of entertainment. Imagine if QVC combined with sketch comedy to connect with audiences and increase brand awareness, and you would get the retail climate in China. Whether or not the comical approach aligns with the retailer’s branding, live video shopping can be a bit of a hole, if customer data is properly analyzed.
Amazon’s rapid expansion of e-commerce and highly personalized offerings have raised core customer expectations for personalization. In a 2018 survey conducted by Epsilon and GBH, 80 percent of 1,000 consumers who participated said they were more likely to make a purchase when brands provide a personalized experience using customer data analytics. With these numbers, personalization should be considered essential: buyers expect this and if the store fails to offer this experience, they may switch to a competitor.
digital white flag
Bricks and mortar may need to reinvent the consumer experience in the digital age, but that doesn’t mean it’s outdated. After years of Prime 2-day charging (or 2-hour charging in urban areas), customers expect things to be easy. However, there is a huge opportunity for bricks and mortar to reignite brand loyalty, something that may have been lost in the age of third-party merchants and chatbots.
Whatever the degree of intersection with physical and digital retailers, physical retailers are finally realizing that the key to winning (and retaining) consumers, is to get into the e-commerce bandwagon they’ve so excited. Now we may start to see physical stores working alongside online sales rather than as competition.