Just Another Brick in the Mall
Travel around the world, and you see up-and-coming economies sporting many shiny new buildings, airports, ports, and factories, while more mature economies display aging legacy infrastructure. It’s the nature of progress. You see the same parallel in retail operations, where newer e-commerce models seem to overcome legacy brick-and-mortar models. But not entirely.
Yes, e-commerce is rewriting the rules for retail. The virtual marketplace has unleashed a wave of consumerism. If you have a good product, a web presence, and a PayPal account, you can use FedEx and UPS to reach the world. Or you can tap into Amazon’s ecosystem and do much the same.
Online retailing is crossing boundaries in other ways, too. Mobile devices enable e-commerce companies to reach into the consumer’s pocket at any time, anywhere, and make a sale. Shopping is more instinctive and educated. Whether it’s automatically triggering an online order for laundry detergent with the push of an Amazon Dash button or "showrooming" the latest fashion item on your smartphone in search of a better price, the sky’s the limit. If drone delivery ever gets off the ground that may, literally, be the case.
But smaller and newer retailers with fairly developed online retail operations are still attracted to the allure of a physical presence. On-demand e-tailers such as Google, Bonobos Guideshops, Birchbox, and Warby Parker are taking a more modern, scalable demand-driven e-commerce approach to brick and mortar. Some are even content to hitchhike on the legacy bricks of established retailers. E-commerce jewelry retailer BaubleBar, for example, tried small brick-and-mortar pop-up shops before deciding to partner with Nordstrom to put its jewelry in 35 locations. New bricks in the mall?
A physical presence adds to the customer experience in a way that e-commerce simply cannot replicate. For example, as more online retailers confront returns—and consumers make shopping decisions based on the ease of returns—the store becomes a reverse logistics hub. Similarly, the race for the last-mile is compelling retailers to become channel agnostic. To drive down logistics costs, they have to source inventory closer to demand. Product might come from a distribution center, a store, the manufacturer, or a truck passing by in the night.
Eventually retailers will feature omni-pricing across channels, click-and-collect and click-and-return convenience, and same-day delivery from local stores. There’s already a reverse showrooming effect. Consumers are researching products online, then going to the store to buy.
Smart retailers are doing what they can—drawing from new and legacy models—to continue growing their customer base. Despite the rumors, brick-and-mortar is back in business.