By 2020, major ecommerce companies will have stores. Here’s why.

December 11, 2017
Far too often the relationship between physical retail and e-commerce has been described as a zero-sum game. But the future of retail belongs to the companies who truly understand and capitalize on the fact that physical, e-commerce and mobile are enhancements to each other, not threats.

In this omni-channel environment, the brick and mortar store will continue to be critical to retail success and we expect that many major e-commerce companies will begin to experiment with physical retail.

Macy’s is a great example of an omni-channel company. “I’m bullish about the fact that we have as many stores as we do and we are in as many neighborhoods.” says Chairman and CEO Terry Lundgren. “It’s the right formula for the customer of today.” (source)

When asked about investing in brick and mortar, he had this to say: “In 2013 we were the 8th largest internet company in America, I think we are going to be the 7th this year. I mean we’re a serious player in the online world in itself, but that’s not the answer. I will predict that 5 years from now, any major online company will have stores.” His prediction that even Amazon will have stores is already coming true.

What differentiates brick and mortar

The reason for this, according to the CEO of JDA Software Baljit Dail, comes down to two fundamental elements: the emotional connection to your brand and instant gratification. “Despite the explosion of omni-channel, the retail store is not dead. It’s still at the emotional and financial core of today’s shopping experience.” he stated at Retail’s Big Show.

The tangible elements of the shopping experience, such as touching, smelling, tasting and trying the product, are just not possible to replicate online. E-tailers are also recognizing the benefit of having face to face interactions with their customers to have a better understanding of who they are and what they want.

Investing in omni-channel makes sense (and dollars)

“78% of consumers still want to shop in the store. And when they do, they spend 6 times more than when they shop online,” says Dail. Those numbers can’t be ignored.

Retail stores that are investing in mobile and online channels are actually seeing a rise in brick and mortar sales or ‘technology-driven retail sales.’ In IKEA, for instance, people research the products on their mobile devices or desktops before visiting the store to sit on the sofas and make the purchase.

At the same time, e-commerce companies investing in physical locations or pop-up shops are seeing direct increases in online sales as well. Essentially all channels raise boats together.

Between omni-channel strategies, increased capabilities to perform in-store analytics and the surge in mobile devices, it will be fascinating to see where the retail industry will be in 5 years from now.

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