Why the Brick-and-Mortar Store Is Thriving in the Digital Age

Despite the proliferation of online shopping over the past few years, the brick-and-mortar store remains a vital component of the retail landscape. It’s the preferred point of purchase for most people. And while e-commerce continues to report impressive growth, that growth is slowing. Meanwhile, brick-and-mortar still commands the vast majority of retail sales and is likely to continue to do so. However, the line between in-store and online shopping is blurring. In many ways, digital channels compliment the brick-and-mortar store rather than compete with it. Technology facilitates this relationship and personalization can help drive in-store as well as online sales.

Most people prefer to purchase in-store

Most shoppers still prefer to purchase in physical stores. A recent survey from Timetrade found that for items that one could purchase in a physical store…

  • 71% of respondents prefer to purchase in-store
  • 27% prefer to purchase online
  • 3% prefer to purchase products on their mobile device

This isn’t surprising. People like to be able to examine products with both their hands and their eyes. Indeed, the same survey reports that 85% of customers want to “touch and feel the products” before they make a purchasing decision.

E-commerce growth is slowing while brick-and-mortar accounts for the vast majority of retail sales

E-commerce continues to grow year over year. Euromonitor reports that sales are set to grow to…

  • $1.5 trillion by 2016
  • $1.3 trillion by 2017
  • $1.5 trillion by 2018

Yet Euromonitor also reports that e-commerce growth will decline from 16% in 2016 to 13% in 2018. At the same time, brick-and-mortar still accounts for the vast majority of retail sales. Physical stores generate 94% of retail sales in the US, representing $3.9 trillion in revenue. However, the distinction between in-store and online is becoming increasingly fuzzy.

Brick-and-mortar stores and digital channels are complimentary

People use digital channels to browse and research products before making a purchase in a physical store:

  • Two thirds of customers do webrooming before purchasing in-store
  • 72% of young customers research online before heading to a store
  • Two thirds of in-store shoppers use a mobile device to compare prices before purchasing an item

Source: Whisbi

The lesson here is that most people prefer to purchase in-store but want to be able to browse and research items online, often on their phones while they’re in the actual store. Clearly, mobile devices, responsive websites and apps facilitate the complementary relationship between online browsing and in-store shopping. But to increase in-store (and online) sales, retailers need to go further.

Personalized marketing can drive in-store and online sales

People welcome personalized offers and content that reflect their individual preferences. Indeed, a recent survey by Listrak found that…

  • 80% of US shoppers find it helpful when brands suggest products based on their transactional history
  • 71% of want recommendations drawn from their online browsing behavior
  • 82% said that they would purchase more products through email if those emails were tailored to their preferences

These figures are reflected in conversion rates. Coherent Path clients, for example, experience 15% to 20% lift within one month of using our platform. But how do you use personalization to go beyond digital conversions and drive in-store sales?

If you have geographic and transactional data on your customers, you can determine 1) which products they prefer; and 2) the stores closest to them. If you have inventory data from your stores, you can determine which stores have which products. With this information, you can send personalized offers that give customers the option to purchase online but also let them know that their prefered items of interest are available in nearby physical stores. Email would probably be the most effective channel for doing so although mobile push notifications are another option.

Similarly, you may know that certain stores are running a promotion or need to sell off excess merchandise. You can send offers promoting such items to the customers who are most likely to be interested in them and who live close to the stores in question. Again, email is probably the best channel for delivering these offers but mobile push notifications can work as well.

Our Campaign Optimization solution can help you execute the above tactics, as it allows you to easily identify the right audiences for product categories and filter by geographic location.

Conclusion

The brick-and-mortar store remains an essential pillar of the retail world. While e-commerce continues to grow, its growth is slowing. In-store purchases still account for the vast majority of retail sales. However, the distinction between in-store and online is not so clear cut. Customers use digital channels to browse and research products before purchasing in-store. People also welcome content and offers that are tailored to their interests. Drawing on geographic data and customer preference data, personalization can help to drive in-store as well as online sales.