The Future Of Brick And Mortar Retail

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The Future Of Brick And Mortar Retail – Despite all the changes, one principle in retail remains the same: it’s important that customers get the products they need and have a great experience while doing so.

Of course, brick-and-mortar retailers have changed over the years. Stores have grown larger and smaller, technology has changed processes and operations, the Internet has enabled new methods of selling, and marketing and customer expectations change from year to year when it comes to the store experience. The COVID-19 pandemic has also disrupted traditional operations, and future retailers will look back on this time and say, “This was a retail-changing moment.”

The Future Of Brick And Mortar Retail

The Future Of Brick And Mortar Retail

Brick-and-mortar retail has a bright future – just consider the fact that small business sales increased 53.05% between 2016 and 2022 – but only if retailers can learn from the past and prepare for the future.

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The history of brick-and-mortar retail dates back to when people sold products to others from a physical location. In modern times, think of general stores, which served as the primary shopping experience for communities outside cities in the 18th century. The general store had everything you needed in one place – although the experience was more utilitarian than anything else and very different from the city’s specialty stores and urban markets.

As more people moved to cities in the mid-19th century, the need for a one-stop shop was recognized with the establishment of department stores: Jordan Marsh opened in 1841, Macy’s opened as a dry goods store in 1858, and Sears – with its mail-order catalog business – opened 1886 its doors. The stores had everything consumers needed, from clothing to home goods to furniture, and often featured “emotional displays, exhibitions, shows and performances,” creating a truly unique shopping experience. .

After World War II, the population began to expand into the suburbs and a different concept emerged: shopping centers. Malls, typically associated with department stores and “big box” stores established in the mid-1960s, served a diverse demographic of shoppers and included not only stores but also food courts, movie theaters, and other entertainment venues.

The next big change in retail? The Internet. E-commerce officially began in 1979 and the 1980s and 1990s revolutionized the way people shop. Consumers can now visit a site like Amazon’s without a physical location, launched in 1995, from the comfort of their own home, make purchases using their PayPal account, and have their products shipped easily.

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With the increasing popularity, ease and convenience of online retailers, the question also arises: “Is this the death of brick-and-mortar retail?” That’s how it seemed in 2016 and 2017, when brands like JCPenney, RadioShack, Payless, Urban Outfitters and many other businesses closed or filed for bankruptcy.

It wasn’t the death of brick and mortar, but the beginning of brick and mortar that had to look different than it did. Since many brick-and-mortar retailers knew they couldn’t compete on price or breadth of inventory, they knew they had to compete on experience instead.

A 2020 study of independent bookstores found that unable to compete with Amazon on price and convenience, brick-and-mortar stores focused on building community, curating hand-picked products, and collecting shared interests. By creating a great shopping experience for customers, independent bookstores have grown despite Amazon’s presence – with the number of stores in the US increasing by 49% between 2009 and 2018.

The Future Of Brick And Mortar Retail

Then came the COVID-19 pandemic and with it closures that left stores barring customers for more than two years. Literally overnight, brick-and-mortar retailers had to rethink their business strategies and get creative with new initiatives. This includes innovations such as online shopping, collect-in-store (BOPIS), street or home delivery, virtual concierge service or engagement events as well as expanding their e-commerce offering.

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Retailers have already introduced new innovations such as touchscreens to make checkout easier, apps to make it easier to find products in store, and digital displays to keep customers informed about product features and in-store safety measures. (Disclosure: My company helps with digital signage.) As retail moves forward, I don’t believe it will return to pre-pandemic approaches – that’s not possible, especially as customers become accustomed to in-store features like BOPIS and Self are cash registers.

My advice to retail managers is to prepare for delivery challenges with innovative technology. Leverage the retail entertainment model for shoppers who want more than just goods and services. And it’s ready to deliver products faster across multiple channels

I believe that retailers looking to engage customers will continue to adopt new strategies to improve the in-store shopping experience. They will also focus on providing a great customer atmosphere, excellent customer service, a personalized experience, connecting their customers to the right product or service, and an overall seamless experience. Ultimately, continued customer loyalty comes down to creating a great store experience that keeps customers coming back and enjoying the “living room” experience that the history of retail has led to.

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Content marked as Expert Forum is created and managed by the Expert Forum. This is a paid membership that is only possible by invitation. The opinions expressed in this content do not necessarily reflect the views of the Expert Forum. Is traditional retail going the way of the dodo? Well, it’s a fallacy that brick-and-mortar retail is going to disappear, but it is

Develops. This is obvious, but how does it evolve? Let’s discuss the term “Clicks and Bricks”, the different retail formats, the retailers they serve, and the evolution of retail formats.

Ten years ago, e-commerce accounted for five percent of retail sales. By 2020, this number had increased to 15 percent and is expected to rise to 15.5 percent in 2021. E-commerce continues to displace brick-and-mortar retail – this is nothing new – but is the triumph of online retail obvious?

The Future Of Brick And Mortar Retail

I say no. At some point, e-commerce will break even, but to understand what that means we need to see through the layers of data.

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First, note that overall penetration is significantly higher if you exclude the terms “auto and parts” and “food and beverage.” Instead of a penetration of 15.5 percent, it is closer to 23. This suggests that we are closer to stabilization than we think.

We can see that electronics, games, books, music, video and office supplies are heavily penetrated by e-commerce, but in my opinion they don’t have much to do with it. I estimate that these categories will account for 50 to 60 percent of total retail sales (with the exception of books and music, where online retail could almost completely replace brick-and-mortar retail because these categories are so conducive to e-commerce). Even in these widespread categories, some degree of commerce continues to occur in brick-and-mortar form. Why? Some don’t have a credit/debit card, some can’t collect the money where they live (e.g. your porch isn’t secure), and some just prefer to shop in-store.

Apparel, home decoration, pet products and beauty care have not yet reached their maximum market penetration and there is still a long way to go. Returns are a major challenge for online clothing, but as technology improves – such as avatars that try on clothes virtually – the number of returns will decrease. With the added margin from lower revenue, brands spend more money on customer acquisition, which increases market share. Through innovation, we will exponentially close the gap between these categories; We’re closer to smoothing out e-commerce growth in these categories than it seems.

Automobiles, auto parts, home improvement supplies (not listed as a category in the table above), arts and crafts (also not listed), grocery stores, supermarkets, and restaurants are less affected by e-commerce. The barriers to e-commerce penetration in the automotive and hospitality industries are clear. Some internet-only concept cars and ghost kitchens are trying to grab market share, but people need to “gum up” and like to eat out. Home improvement, craft and grocery stores sell parts for projects that consumers prefer to find, touch, feel, smell and compare in person.

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In the debate about the future of stationary retail, retail formats are the next piece of the puzzle.

The first prediction I make for the future of brick-and-mortar retail is how many square feet of retail space per capita there will be in the United States. Here’s a look at how the United States compares to other countries.

In the US, consumers have more money to spend than in most other countries, but we have clearly left retail behind and will likely need to adjust to 10 to 15 square feet per person in the next decade to combat oversaturation and to eliminate brick-and-mortar retail in the U.S. The mortar trade is sustainable.

The Future Of Brick And Mortar Retail

I predict that half of retail will disappear in the next decade, but I’ll be more specific and break it down by format.

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Specialty areas (mainly shopping centers) are most at risk. There are 1,100 malls in the United States, and I estimate that within 10 years we will have nearly 400 clean malls and perhaps another 200 partially redeveloped or mixed-use properties. The top third of malls (assets with unanchored sales of $800 or more per square foot) will survive, the bottom third will

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