The Return of Bricks and Mortar Retail

When Amazon, the goliath of online retailing, secures prime retail space in the heart of Manhattan across from the Empire State Building, people start talking.  After all, their movement into a physical bricks-and-mortar retail space is the opposite of the original market-disrupting strategy that saw many traditional book retailers close their doors.  Last week, Greg Bensinger’s article in the Wall Street Journal revealed a significant change in their strategy.  The question is….why?

Amazon certainly isn’t the first e-retailer to open a physical store where customers can interact with their products in person.  In recent years several online brands have introduced a physical storefront to their omni-channel strategy.  Bonobos, the online men’s apparel company, tested its first “Guideshop” in the Fall of 2011 at their New York City headquarters.  The purpose was to provide men with a physical space to try on productsprior to placing e-commerce transactions. Within a year they opened a fully functioning store; a similar process several e-retailers (including Vancouver-based Indochino) have used to go from online-only into the traditional bricks-and-mortar retail world.

This trend is backed by some great data.  According to a report by A.T Kearney, “95 percent of all retail sales are captured by retailers with a brick-and-mortar presence” and “two-thirds of consumers who purchase online use the store before or after the transaction”.  Their report also states that “the value of stores for customers and retailers is far greater than the sales captured in them” and that they “actually help the retailer drive online sales”.

So, what would Amazon need a store for?  Well, one can assume it is for customers to interact with their new phones and television product lines.  This is something they experimented with last November with their Kindle pop-up stores in select markets.  With data supporting the desire for customers to have access to a physical store to preview the product or exchange it in-person, their desire to open a store makes good sense.

The question is whether Amazon will be able to personalize content in an omni-channel environment that includes a brick-and-mortar store?  Here at Coherent Path, our customers are doing this, and much more.  Not only are they personalizing the products they present to customers using a highly sophisticated geometry-based map, they are also using it to drive in-store purchases.

The patented Coherent Path map takes their customers on a journey both online and offline; whether it be driving online sales through more sophisticated content personalization or with offers and discounts to attract in-store visits, the model works.  It is helping retailers personalize the right content at the right momentum and can target customers to mould behaviour in both an online and in-store setting.  Customers win by receiving a personalized experience and the right product and offers aligned with their data-validated preferences for shopping.

If they do get their own model right, Amazon’s strategy could be yet another threat to many retailers.  That is, if these traditional retailers don’t get the upper-hand with in-store engagement before Amazon does.  Either way, the bricks-and-mortar store has clearly returned.

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