9300 stores were closed in 2019, nearly 2000 more than in 2017, and only 2 weeks in the new decades, 600 other stores were already closed. Is it the dead of brick-and-mortar stores? We dare to say it’s not. Far from it, in fact. Let’s discover more about the future of physical stores in the following.
How physical stores change
According to Shopify, 94% of total retail sales are still generated in physical stores. Data from Oberlo shows that despite the rapid growth of e-commerce, online shopping only accounted for 13,7% of total retail sales in 2019, representing $3.43 trillion of the $25.038 trillion value of the retail market. This figure is projected to grow to 15,5% and 17,5% in 2020 and 2021, consecutively. Impressive nevertheless, yet more than 80% of all retail sales will likely still be done in actual physical stores.
That’s because customers are still getting a lot out of their shopping experiences with brick-and-mortar retailers. From convenience and gratification to inspiration and that special feeling of holding a product you love in your hands, customers are still gleaning positive experiences from in-store shopping.
That brings us an assumption: physical retail is not simply a product distribution channel — it’s a powerful marketing media channel that can be strategically used for customer acquisition. A media experience that would allow that consumer to truly internalize your brand story, to understand your products and to begin to feel a part of your community. In other words a truly remarkable and memorable human experience.
Future of physical stores in retail
Having physical footprints is still critical for any brand (even in any industry), in fact, many e-commerce players have started to open their own brick-and-mortar stores (think Amazon Go or Alibaba New O2O Retail). Those that say that brick-and-mortar retailers are on their way out aren’t looking at the bigger picture. In my view, the rapid rise of e-commerce will not be a threat to offline stores but the necessary catalyst pushing brick-and-mortar retailers to innovate and transform their businesses for the digital era.
All in all, physical retail is not dying, it just needs to step up its game and accept the challenge to “level up”. Big chains like Walmart and Target have rolled out concierge services, in-store pickup for online purchases, same-day delivery and much more to match the convenience offered by online brands. Or you can take a look at the model of “New Retail” from Alibaba below.