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Jordy Leiser: How To Predict The Future Of Physical Retail In The Digital Age

Jordy Leiser: How To Predict The Future Of Physical Retail In The Digital Age
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Perhaps surprisingly, the majority of shopping still takes place offline and in the store.

Jordy Leiser, StellaService
  • 2 may 2014

The dawn of the Amazon Age has shifted momentum in favor of online shopping. E-commerce is continually picking up speed and reaping market share, solidifying its place as the preferred shopping way of the future. But believe it or not, despite the ease and convenience of a one-click-shop for all your necessities and luxuries, the majority of shopping still takes place offline and in the store. By the end of the 2013 holiday season in-store shopping garnered $265.9 billion compared to only $46.5 billion online – proof positive that physical stores aren’t going to suddenly and completely disappear. In fact, retailers still need to know and interact with their customers on a personal level, making a brick-and-mortar retail strategy a key tool for both traditional retailers and ecommerce-only brands alike.

Maintaining a geographic footprint can be a significant financial burden for retailers, seemingly a crippling cost that that can’t be sustained as ecommerce gains share. However, those big-box stores are proving to be an asset for some companies. Major retailers like Best Buy and Macy’s are taking advantage of their physical presence by turning their hundreds of locations into mini warehouses and fulfillment centers. Compared to online-only retailers who only have a few distribution centers, leveraging physical stores in this way can be a critical strategic advantage.

Since moving to a ship-from-store model in June, for instance, Best Buy has made some pretty impressive improvements when it comes to delivery. By August, a mere two months later, the retailer actually averaged faster than Amazon. At the same time, Macy’s has become the tenth largest Internet company in terms of revenue, and in a recent Buzzfeed article, CEO Terry Lundgren attributes this on a strategic level to the fact that he has 658 distribution centers, compared to Amazon’s 84.

Of course, customers still place a high value on seeing a product before they commit to buy, which is why it’s equally important for retailers to build a great in-store experience. Take the Nike Running store in the Flatiron district in Manhattan, for example. They have treadmills in their windows, not for display purposes, but to let shoppers take the sneakers they’re thinking about buying out for a literal test run. This is something that’s just not possible in the world of ecommerce.

There are also some great new technologies emerging to take the in-store experience one step further. Companies like Hointer embrace the mobile habits of today’s shoppers, and offer solutions for retailers to reinvent the in-store experience by allowing customers to scan items they’d like to try on with their smartphone or tablet, and sending them directly to the dressing room. And in the vain of better knowing your customers, Apple’s iBeacon, which is being tested by the likes of Macy’s and American Eagle Outfitters to name a few, offers mobile tracking technology that enables retailers to offer shoppers targeted and timely deals in-store.

Creating a unique, easy, enjoyable shopping experiences across all channels – digital or physical – is an escalating battle among retailers. For many ecommerce only brands, a brick-and-mortar strategy is helping to bridge the digital divide between its customers. Warby Parker, which is known for its superb customer service, started as an online-only boutique eyewear retailer and now has 6 physical locations across the United States. Kate Spade Saturday took its web-based line of casual clothes to the streets of Manhattan and created digital windows where passersby could purchase anything in the window at an adjacent touchscreen. Bonobos has expanded offline and created the ultimate fitting room equipped with a personal concierge to help you find the right style and size, but allows online purchasing only. These retailers, founded solely on the Internet, have realized how important it is to be physically connected to its customers and have made great strides to get there.

While traditional brick-and-mortar retailers work to leverage their existing geographic footprints, and ecommerce only brands recognize the power of face-to-face customer interactions, it quickly becomes clear that online and in-store shopping are in no way mutually exclusive; this isn’t a zero-sum game. The most successful retailers will be the ones who are able to make the digital and physical work together, elevating the customer experience as a result.

Jordy Leiser is CEO of StellaService, a customer service analytics company that independently monitors and rates the customer service and fulfillment performance of online retailers.

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