Did Physical Retail Die in 2017?
Not by a long shot, read on.
Large-scale retail closures made headlines across the country this year – Sears the most heartbreaking for our Canadian readers (we’re sure Mike Myers is disappointed too).
In an ever-changing retail landscape with demanding consumers needs, there were some companies who just couldn’t adapt quickly enough to stay afloat. Many well-known brands shut their doors, Gap (200 stores), Teavana (379 stores) and American Apparel (110 stores).
But, believe it or not, a retail analysis by Forbes revealed more stores opened this year than closed.
Multiple studies, like the 2017 Retail Industry Report by TrendSource, show younger consumers – millennials and Generation Z – still prefer shopping in physical locations. Across the fashion, home-improvement and even electronics categories, consumers feel physical retail offers them a better experience when it comes to product availability, customer service, and returns and exchanges.
Even the MVPs of e-commerce are harnessing the power of brick-and-mortar. Amazon hit headlines in August when they invested in physical retail with a $13.7 billion purchase of Whole Foods. While their online business model is profitable, savvy brands are staying ahead of the game by investing in diverse forms of physical retail as they know it is an important element in building customer relationships and bringing their brands to life.
In a bid to link the on-line and offline, Nordstrom has developed Nordstrom Local, an investment that enhances the customer experience. The concept is a physical location where customers can pick up and return their online orders or use additional on-site services, like tailoring or personal styling.
Many retailers are coming to terms with that idea that consumer engagement is of equal or greater value in comparison to traditional retail advertising. Building an experiential model is a better way to satiate consumers’ needs and cultivate brand loyalty which, ultimately, benefits the bottom line.
In many cases, brick-and-mortar is a complimentary strategy for brands with a strong online presence. For example, all Apple products can be purchased online, but the tech giant uses their physical retail stores to achieve what can’t be done online. In an interview with the Harvard Business Review, Ron Johnson, who pioneered the concept of Apple stores said,
“A store has got to be much more than a place to acquire merchandise. It’s got to help people enrich their lives. If the store just fulfills a specific product need…It’s transacting. Any website can do that. But if a store can help shoppers find outfits that make them feel better about themselves…the store is adding value beyond simply providing merchandise. The stores that can do that will take the lead.”
In 2018, brands are expected to continue investing into various forms of physical retail, with pop-ups becoming a strategic method for leveraging brick-and-mortar. The reason? They want to go where the people are, and stores still play a pivotal role in drawing in consumers.