Future of Retail: Bridge the Gap Between Physical Stores & E-Commerce

What do I mean by this?

First, let’s discuss where retail is at currently. The Christmas 2014 season retail sales dropped, but that is not seen as permanent.  Economists were a bit surprised more people didn’t take advantage of the falling gasoline prices by spending more of their discretionary income.

I would caution those who lament this to remember that (for many Americans) wages remain stagnant while the cost of living keeps rising. Over time, this is bound to have an effect of spending habits.

My observation: people are becoming a bit more choosey in what they spend their hard-earned dollars on.

Another point to consider for the lackluster holiday season retail sales, is the LA-Long Beach Port strike, which we have discussed on the blog before. This had an effect on inventory levels, especially for smaller businesses. On more than one occasion, I’d noticed stores that seemed a little bit “empty” compared to past levels.

So, is retail dying? No, not really. People, especially in the United State’s consumer driven culture, are always going to buy things. We don’t make our own clothes anymore. Few of us grow our own food. We’ve been conditioned (to varying degrees) to desire the latest and greatest thing.

I submit retail is changing.

By this I mean traditional brick and mortar stores need to become more. Stores need to become responsive to increased customer demands. Many people see the physical stores as competing with e-commerce. We need to change this train of thought and re-direct it to seeing the physical and electronic and two side of the same coin. They complement one another.

The company where I work has been making a big push to increase website traffic and sales. This supports the physical retail stores we have located throughout the country. As we navigate the increased presence of e-commerce, we have developed (and continue to do so) methods which streamline communication efficiency between the two areas of the company.

Many companies are looking to optimize customer satisfaction, while reducing expenses. Isn’t that the name of the game? Get the customer his or her good on time, in good condition as efficiently (cost-effective) as possible.

For retail stores, the future is in action. Responding to changing customer needs. Staying ahead of the curve.

A website and physical branches need to become one. They can’t compete, because on a cost basis, it is cheaper for the customer to click a button and avoid time and money spent driving to a physical location. Amazon and other direct-to-consumer-homes services eliminate that headache for customers. So how does a brick and mortar compete?

The physical store needs to become an extension of the website. And the website an extension of the store.

They must co-exist.

A person can’t fully replace the feeling of walking into a store and smelling the hundreds of different spices for sale by visiting a website. We humans are incredibly in tune with our senses. Smell and touch being two of the most powerful. You can’t sate either of them through the click of a mouse. You can, however, have someone order online and come to the store to pick up the item. Or you can have someone visit the store initially and then order from the website after that. But you want the two areas to feel in concert with one another.

Another idea might be to use the retail store as a mini-warehouse. The store gets a weekly order updating inventory to optimum levels. A customer goes online to the company website, places an order and is given the option of picking it up at their nearest store or having it shipped directly from the store to their home. By shipping from a local store to a nearby customer, instead of a main warehouse or distribution center, freight costs are cut.

No matter what operational strategies a company implements, the future is pointing to brick and mortar and e-commerce sales being linked by supporting each other.

-Andy

(Please check out my website, www.supplychainperspective.com for more on the various issues in the supply chain field.)