by Ray Uttenhove
After 2011 holiday retail sales were released, the prediction of the demise of brick and mortar stores as we know them continues.
Traditional retail sales grew about 4 percent over the previous year for November and December while online sales increased a whopping 15 percent. While online sales still account for only about 10 percent of total retail sales, traditional retail is being transformed as internet shopping increases.
Retailers have seen the “writing on the wall”.
However, they have interpreted it not as death to their traditional stores, but as an important tool. Successful retailers are investing in all channels to serve the customers’ demands.
Today what we are seeing is the merging of technology and ecommerce with brick and mortar stores. Clearly retailers recognize that the American shopper expects to be able to shop 24/7, 365 days a year. The retailers have capitalized on this new trend to develop innovative websites.
Some major changes are evident:
Retailers are working hard to manage online shopping traffic so that it is a good experience. With the explosion of online sales, there have been growing pains. It is important that retailers control inventory, deliver product in a timely manner, and make sure that there is an emotional and human connection with the customer, particularly when there are problems. A disgruntled customer can go viral with Facebook, Twitter and the pervasive blogs therefore customer service is more important than ever.
Margins can be challenged with free shipping and in some cases free returns. Improvements to websites are the key to fewer costly returns: 360 degree photos of apparel, clear size charts, etc. are examples of improvements that are being made.
The integration of online sales and stores is a major emphasis. What better way to increase sales than to have customers return product to stores, which often results in more sales. Apple stores are a great example of showrooms that support online sales and vice versa. Thank you, Mr. Jobs.
Certainly internet shopping will affect brick and mortar stores going forward. Will the new channel serve as a threat or an advantage? That will be determined by how retailers embrace change. One way or the other the new trend will create real estate opportunities.