US department stores - Brick & Mortar Apocalypse

Some of the largest US department stores, like Macy’s and Sears, have each closed down hundreds of stores, and traditional retailers like Payless Shoes have filed for bankruptcy.  Some reporters are saying this is the end of traditional brick-and-mortar retail, but while stores are closing, the amount of total consumer spend is rising.

But are we experiencing a brick-and-mortar apocalypse?

The answer is definitive: No.

As the chart demonstrates, while e-commerce is growing rapidly, Online sales still only represent less than 12% of the total retail sales.

The rise of e-commerce on the united states

There will always be a need for physical retail; however, the future of what physical retail actually looks like is an evolution and morphing guided by how customers prefer to purchase.

One of the reasons for the rise of e-commerce popularity is that brick-and-mortar has not seen a significant change in decades.

  • Customers enter a store,
  • Search for an item,
  • Pay, and
  • Leave.

Indeed, shopping in the past was more about impulse buying. But not so much today. Now, with the internet and social media, shoppers normally do research before making the decision to purchase. However, for many products, customers still need to see and feel the product before making the actual purchase. This fact is why brick and mortar stores will most likely stay around as part of a two-channel model. However, technology may take an even bigger bite into the “need to be there” by using Virtual Reality and Augmented Reality.

There are several aspects of physical retail that e-commerce can’t replace:

  • The immediacy of goods – no shipping, no waiting, no delays.
  • Ability to touch/test/try out goods before purchase.
  • Easier returns with in-person customer service.


According to some retail analysts, we’ll soon see a variety of services specific to physical retail that will update and enhance the shopping experience.

For example, hardware and home-goods stores are beginning to incorporate Augmented Reality within their in-store experience. This enables customers to see how specific pieces of furniture or how furniture sets will fit in a specific space.  This is an experience that entices customers to shop in-store rather than online because it’s

  • A) a solution for a real customer challenge, and
  • B) will most likely be only feasible in-store.

The scope of brick-and-mortar will probably become much smaller and more specialized to remain enticing to customers.  

According to Jetlore’s consumer survey report from early February 2017, 64.5% of consumers prefer online shopping because they have immediate access to their preferred stores anytime and anywhere.

Note that the “preferred store” translates into “preferred brands” and this has not escaped the notice of brank manufacturers. However, up to now, the manufacturers see no need to bit the hand that helps to feed them.

Online retail is simply another channel for customers to extend and amplify the usefulness of brick and mortar, not something that will completely destroy it. Companies need to invest in a system that bridges the gap between online and in-store in a meaningful and relevant way, and the way to do that is to enhance the visibility of each individual customer’s preferred content in the channels that make the most sense. Without a way to understand how online and physical retail behavior interacts, there’s no way of creating an experience in either channel that entices customers.

According to an online consumer study, the two most frustrating aspects of online shopping involve retailers that don’t remember customer information and retailers that offer irrelevant product recommendations that are way out of the consumers’ interest zone. 

The real opportunity for retailers lies in the ability to understand and predict each customer’s preferences, in both contents and preferred shopping method. Indeed, most salespeople don’t chat with customers to learn more about their shopping habits and preferences to say nothing about the cataloging of that sort of information down for future analysis. This is another very powerful ability of digital marketing and easy customer surveys over their mobile devices within minutes of their purchasing experience.

 By predicting what individual customers want to buy and where/when they want to buy it, retailers can adapt content to user preference in the correct channel.  For example, a customer browsing with the intent to buy in-store shouldn’t receive a “Free Shipping” promotion, and a customer with the intent to buy online shouldn’t receive an in-store discount.  

In summary, there is a place for both online and B&M shopping channels. However, given the busy lifestyles and a shortage of time, online sales will grow faster than B&A, but most likely, both will work together to fulfill customer preferences and needs.

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