It's 2017 and brick and mortar is still not dead

Depending on who you ask, physical stores are either struggling to compete with other forms of retail or holding their own; a recent Capgemini study found that 32% of its respondents would rather do dishes than go to a retail store, while Nielson found that 61% considered a trip to the grocery store ‘a fun day out for the family’. iVend Retail found 52% shop ‘mostly in stores’, and IBM tells us that 67% of Gen Z prefer to shop in-store vs 22% online – a finding that may surprise some.

Meanwhile the NRF estimated that 2016 holiday sales would surpass $650bn, including $117bn in ‘non-store sales’, so on a pure dollar basis brick and mortar still has the edge. But the growth rate of store sales is half that of non-store sales and the proportion of shoppers for each channel is now roughly equal, so we’re seeing more money spent online. This isn’t contentious -  Pew Research Center reports that nearly 80% of Americans now make purchases online, vs 22% in 2000.

While it’s hard to argue against the rising popularity of ‘non-store’ shopping, what does that mean for retailers? Is there still a place for brick and mortar?

Tellingly, many e-commerce brands also have stores in the real world; in fact most of the top 25 ecommerce retailers have a physical presence in addition to their online stores. Even Amazon, generally considered the ne plus ultra of online shopping, is continuing to experiment with brick and mortar.

The difference between in-store and online shopping is experience. 57% of consumers want stores to do more than just sell products, and there are elements of the physical experience that can’t be replicated digitally. Online may have the edge on price, but shoppers come to stores to experience products and brands first-hand: 85% because they like to ‘touch and feel’ products before buying. That’s not something e-commerce is going to offer the masses any time soon.

Ironically, given the obvious opportunity to deliver in-person experiences in physical locations, one of the criticisms leveled at brick and mortar is that the shopping experience is less personalized. Shoppers are accustomed to a certain level of targeting from e-commerce – browsing and purchase history have long been used to suggest new products, retarget ads and tailor promotions. While brick and mortar retailers are increasingly using technology to identify customers and personalize offers, most have a long way to go to catch up to the digital world: one study found 48% of shoppers receive targeted offers online, but not in store. Ideally we wouldn’t see this online-offline distinction; omnichannel means using customer data from all channels and offering the same level of personalization regardless of where the shopping takes place.

For customers the digital-physical distinction is not so distinct these days, and there’s no denying technology is playing an increasingly important role in in-store purchases. Pre-purchase research is now likely to involve computers and smartphones, and 77% of mobile-reliant US shoppers have used their phone in-store to help them shop. Customers are increasingly using phones in stores to compare prices, access coupons and look up product information, and will spend more if they browse the web while there. Deloitte estimates that digital impacts up to 64% of every dollar spent in-store.

The data potential of smartphones and other devices already being used in stores is undeniable, and real-world retailers should make the most of them to create the experiences customers have come to expect. The real payoff comes from optimizing real-world experiences to make store visits more rewarding: by personalizing offers, reducing queues, improving in-store navigation and empowering associates with mobile technology. Stores still have their place, but to remain competitive they're going to have to be as technology-savvy as their online counterparts.

There’s no need to reinvent the wheel; retailers can build capability incrementally by starting with existing technology and adding complexity as the need arises. Most retailers already use a CRM and have a POS system in place, so that's a solid starting point and good groundwork for developing a more comprehensive IoT-driven CRM...