Online shopping has undoubtedly caused a stir in the retail environment—particularly for brick and mortar store operators. Given all the attention e-commerce receives, you would assume it is pretty much taking over the entire shopping domain… right? A recent study conducted by the HRC Advisory revealed online shopping isn’t completely winning yet, but it certainly isn’t going down without a fight.

The (Surprise) State of E-Commerce

It may come as a surprise, but Brick and Mortar shopping still makes up 94% of total retail sales. The important distinction between online and in-store shopping is about customer experience. Customers value the experience of shopping—a consistent interaction with a brand is particularly desirable. A result of the emphasis on in-store shopping experiences is the slowed pace of online stores, even as the channel matures. In fact, 11 public department stores saw a 20.7 percent decrease in growth rate between 2012 and 2015, according to the study.

So retail stores have nothing to worry about?  

Not quite. The HRC study revealed a 25 percent decline in operating earnings due to that shift from in-store to online sales. To stay relevant, retail stores are fighting to enter the online world, but not without a few obstacles. First, the cost of operating in an online world, where all parts of the process—delivery services, curbside pickup, and more—all require more money and manpower from the store. Those fees aren’t taken up by the customers, so online shopping is stealing away brick and mortar customers while simultaneously driving up their costs. Second, stores have to worry about all other expensive elements of maintaining brick and mortar stores—like rising real-estate costs. The retail industry is trying not to sink, but getting hit with waves from every side.

How can Brick and Mortars prevail?

  • Stay efficient. As HRC CEO Antony Karabus says, “…retailers need to re-examine the cost structures of their physical stores and infrastructure, and become more efficient omni-channel operators to staunch the losses from extremely high online fulfillment costs.” Stores should be able to succinctly see the successes and failures of each store in their district. In considering a store closure, stores operators should know two things: First, that it is absolutely worth their time and money to close the store, and second, what exactly went wrong, so as to prevent other stores from making those same mistakes.
  • Stay relevant. “Those who can engage customers and meet their heightened expectations, while offering complete visibility of inventory availability, can be lucrative in reducing markdowns and improving inventory productivity,” Karabus also advises. Don’t let logistical hurdles be the reason a Brick and Mortar falls off the grid. A way to stay proactive is to be in tune with what your customers want and react in a timely manner to meet new expectations brought on by e-commerce.
  • Stay consistent, and make every store perform like your best store. If you look at store operations from a holistic approach, where data is connected across all stores, the retail industry can provide consistent experiences for customers, employees, and managers alike.

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