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It's no secret e-commerce has had an impact on brick-and-mortar businesses, and you can point to its growth in annual sales as proof: a steady 17% increase in annual sales year over year. However, people often miss out on the fact that e-commerce shopping is still tiny compared to brick-and-mortar sales. Also, the health of the brick-and-mortar industry shouldn't be summed up in just one metric.
It's not to say that e-commerce hasn't affected brick-and-mortar sales. More than 6,400 brick-and-mortar stores closed down in 2017, and key brands in the industry, like Sears, have also recently closed their doors. Much of that has to do with the growing e-commerce space.
Additionally, consumers are now largely plagued by the Amazon effect, which means they expect a seamless shopping experience with instant rewards. Consumers expect to find exactly what they're looking for with little effort and want the item(s) delivered within a very short time frame. However, this is by no means the end of retail. In fact, numerous stores have taken steps to take advantage of the intersection of technology and retail shopping.
Here are four ways you can optimize your brick-and-mortar experience to best fit today's modern consumer.
Digitize Your Experience
Mobile technology plays a crucial role in retail. Almost half of all Black Friday web traffic originated from mobile phones in 2017. More and more people are beginning to prefer shopping with their phones. Take that a step further and introduce mobile use cases for your brick-and-mortar use case. For example, Whole Foods leverages an app that allows customers to quickly see all applicable sales and deals, then they can scan a single barcode to apply all relevant discounts to their basket at checkout.
Theoretically, they've removed some of the most major pain points of brick-and-mortar shopping by centralizing information, allowing for shopping to be done much more efficiently, and they're also rewarding customers for using their app with coupons as well.
See also: Is Ecommerce A Viable Option For Your Small Business?
Play Brick-and-Mortar to Its Strengths
The biggest edge that brick-and-mortar shops have over e-commerce is the customer's ability to see and feel a product before making a purchase. Of course, the strength of this will vary based on the products a customer needs. For example, this might be more important for a customer buying clothes versus a customer who is buying a book.
Additionally, look at the Amazon effect. Customers love instant gratification, and customers get that with the brick-and-mortar experience when they take a purchased item home the same day. Let's take Best Buy stores for example. Best Buy rotates a very limited number of products in its showroom at a single time but still makes it easy for customers to find products. In other words, customers have the physical benefits of trying out products before making a purchase with the benefit of quickly finding products they want. Best Buy was one of the first major retail brands to apply these changes to its brick-and-mortar stores and have long been touted as one of the biggest names spearheading the brick-and-mortar "comeback."
Turn the Traditional Shopping Trip Into an Experience
Brick-and-mortar stores aren't likely to disappear, but it's also unlikely they'll remain the same as the years go by. Consumer behaviors are always changing, and recent trends have pointed to a strong preference for experience-based shopping.
Samsung has set up several shops where customers can experience virtual reality. Casper has set up a "napmobile" where customers can experience their mattresses before making a purchase online. Starbucks has doubled down on its brick-and-mortar shops by virtually ending its e-commerce business and launching premium Starbucks Reserves instead. Different businesses are finding new ways to make their brick-and-mortar locations more enjoyable. Each brick-and-mortar location is unique enough to pull customers away from the draws of online shopping. These are just some additional ways brick-and-mortar stores can offer something unique that online stores simply can't.
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Combine Brick-and-Mortar with E-commerce for the Best Shopping Experience
Multichannel businesses have the potential to post stronger numbers than businesses that leverage only one channel. For example, AmazonFresh, which only sells online, recognizes an average order size of roughly $84 while multichannel stores post an average order size between $120 and $180.
Despite strong online sales, Nike continues to revamp its brick-and-mortar experience. Just take a look at Nike's flagship on Fifth Avenue in New York City. By analyzing consumer data, Nike selects items to feature on its floor. Inside the store, customers can use the mobile app to closely interact with products to examine size availability, store items in a digital locker until they're ready to check out and more. All of this takes nothing away from the fact that consumers still have the choice of purchasing products online as well.
However, one big downside of brick-and-mortar locations is that they can be expensive. Renting or buying a store can be costly, and small businesses usually struggle to justify such high expenses. There are plenty of loans to help make those expenses more palatable, but you should always check to see that you'll be projected to earn a net profit throughout the term of your loan or mortgage.
The way customers shop is changing, and you can thank Amazon for a lot of that. But if you think brick-and-mortar stores are gone for good, you'd be missing out on a lot of unrecognized potential. Brick-and-mortar stores can be highly beneficial when utilized correctly. Assess your own strategy to first determine if a brick-and-mortar location is a good idea for your business.
Justin Song is a Senior Research Analyst at ValuePenguin. He was previously a corporate strategy associate at IBM. His primary focus is currently in small business debt financing and he works with business owners on a daily basis to help them grow their business.
Keeping up with the trends and providing cutting-edge customer experiences requires investing in your business. If you need cash to grow and improve your business, it’s time to look at what types of financing are available. We take a deeper dive into financing for small business in this ebook, “The Basics of Small Business Financing.” Learn more specifics about how to get a small business loan, how to open a business line of credit or get government contract financing.
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