Brick and Mortar Stores are the Future of Retail

Brick and Mortar Stores are the Future of Retail

With all the hype around online and digital, it’s hard to separate fact from fiction.

While digital has been one of the principal disrupters in retail, pure-play online retailers, such as Amazon, only account for 5% of total U.S. retail sales with an additional 5% of retail sales categorized as multi-channel.

That means that 90% of retail sales are still happening where sales have taken place for hundreds of years: physical stores.

And that also means that 95% of all retail sales are captured by retailers that have a physical presence.


Even though this may seem like a bold claim to some, the future of the retail industry is still solidly anchored in the brick and mortar channel.

Consumers prefer to shop in physical stores as it allows them to have a sensory experience – they can touch and feel products, immerse in brand experiences, and interact with sales associates.

This hypothesis was recently confirmed by the results of a survey conducted by consulting firm A.T. Kearney.

From teenagers to seniors, 2,500 shoppers were asked what channels they prefer for various stages of the shopping process – from initial discovery of new products to making a return.

The results: the store wins in almost all stages, even with the famously digital Millennial generation.

The study also points to the immense value of the in-store experience for ALL retail sectors, as opposed to the previously held belief that the in-store experience was more important for only certain categories, like apparel.

For instance, 35% of consumers shopping for computer equipment and electronics, a category that has been dominated by e-commerce, prefer to try out the items in a store before buying them.

The Future of Retail

All things being equal, the findings of the study hold immense significance as they indicate that it’s better to have many stores that complement a respectable online channel.

This news may comfort some traditional retailers, as building an effective and efficient e-commerce operation is difficult, but developing a store network of hundreds or even thousands of stores is even more challenging.

What makes the situation a bit more complex is the fact that we don’t live in a vacuum. Traditional retailers need to pick the best sites for stores, determine the optimal number of locations for each market, keep up with consumer expectations of what the in-store experience should be, and get better at e-commerce strategies.

So instead of concentrating solely on one channel, retailers need to be focusing on optimizing their physical store portfolios, while simultaneously improving their online presence.

Additionally, retailers need to adjust the way they view the value of their physical stores.

When online shopping exploded, retailers determined the impact to performance of a store purely based on its sales numbers.

In reality, however, this way of thinking clouded and skewed retailers’ perception of what was actually occurring.

Stores need to be viewed in terms other than just sales as stores help consumers discover new products and test ones they’ve seen online – regardless of where the actual transaction takes place.

Brick and mortar stores capture sales, but they also create value by driving online sales. This means that the value of a store for both consumers and retailers is greater than the sales captured within them.

So, just as consumer shopping behavior has evolved, the way retailers account for sales and value needs to evolve as well.

If you’re looking to explore new growth strategies, let’s discuss how customer analytics are being used to help retailers like you mitigate the threats and exploit the opportunities the shifting retail landscape provides.