Enter e-Commerce. This takes the product to the customer and makes buying and selling products easier than ever before. In fact, a transaction could have been completed faster than the time it would take to read this far into the paragraph. While this makes the experience more convenient than ever for the buyer, how does it affect the industry as the whole and what does it mean for the future?
Retail has been a staple of life ever since the dawn of modern humans and the barter system. With the invention of the cash register by James Ritty in 1883, the stage was set for retail on scale never seen before. Department Stores became hugely popular with companies like Macy's and Harrods and their one-stop-shop mentality.
The number of ways a consumer is able to acquire a product is at an all-time high today with both online and in-store shopping, over-the-phone ordering, and even trading as ways to get transactions done. But like the barter system and mom-and-pop stores, the medium people will use to buy their products will continue to be shaped by convenience, and while new generations of people continue to shop, a trend can be seen as to how the various generations do their shopping.
According to a 2017 survey conducted by Statista, retail is still very much alive and even preferred among older generations, with only 28% of Seniors and 41% of Boomers preferring to shop online. However, with the younger generations, it drastically differs. Over 55% of Gen X and a whopping 67% of Millennials prefer online shopping to in-store, and with the first waves of Gen Z being old enough to become a major shopping demographic, that number is expected to continue to increase. While this is going to make shopping much more convenient, we must look at what this means for the future of brick-and-mortar stores, but before that, how exactly e-commerce became so popular and why consumers are choosing online versus in-store must be seen.
According to a 2017 survey conducted by Statista, retail is still very much alive and even preferred among older generations, with only 28% of Seniors and 41% of Boomers preferring to shop online. However, with the younger generations, it drastically differs. Over 55% of Gen X and a whopping 67% of Millennials prefer online shopping to in-store, and with the first waves of Gen Z being old enough to become a major shopping demographic, that number is expected to continue to increase. While this is going to make shopping much more convenient, we must look at what this means for the future of brick-and-mortar stores, but before that, how exactly e-commerce became so popular and why consumers are choosing online versus in-store must be seen.
Transactions taking place over the web dates back to the 1990s. E-Commerce started officially with Pizza Hut opening its online store in 1994. Later in 1995, e-comm pioneer Amazon opened its online store and sold its first book. In 1999, online sales by retail companies reached a staggering $20 billion, more than half of what was made on in store shopping that year. The industry was then reshaped with the dawn of social media 2007 by sites like Facebook and MSN. This was a true game-changer as advertisements were not only displayed on social media, but contained a link to the store website, making that medium even more effective. This later became more advanced with data collection, which allows companies to advertise directly to customers that would be interested in their products. This new way of advertising was transmuted into more popular, modern social media platforms like Instagram and Twitter, allowing a new form of advertisement in social media influencers.
Today, the convenience of online shopping is unmatched, Consumers are able to shop from the comfort of their homes. Next-day delivery is now an option, price comparing has never been easier and crowds are a non-factor. There is no need to run around searching for a product as it can easily be found through a Google search, and much more time is saved by consumers. Literally anything that can be bought, can be found online. These factors are what makes online shopping increasingly popular, but where does this leave the future of the retail store?
According to a 2018 interview in The Marketing Journal, Baker Foundation Professor of Business Administration at Harvard Business School John Deighton says that “Retail is not dead, Mediocre retail is dead.” In order for the brick-and-mortar retail stores to continue to exist, they must be able to provide something that e-commerce cannot: excellent and unparalleled customer experience. Deighton also states that “those retailers who are genuinely linking their digital and physical environments in a way that allows them to understand their customers and their needs are pulling ahead of the pack”, and he is not wrong.
Companies like Nordstrom, Walgreens and even Starbucks are masters of this omnichannel retailing, and it shows as they are some of the leaders in their specific field of retail and all post incredible sales numbers, both online and in-store.
What this means for the future of brick and mortar is that companies must be able to adapt to the changing landscape. If they do a good job, they will be able to exist, just like the previously mentioned companies. If they do not, however, brick-and-mortar stores will ultimately fail, as seen in the case of Barneys NYC. Founded in 1923, it was a leader in retail; however, its online presence was unequal to that of other luxury department stores such as Saks Fifth Avenue and Neiman Marcus. On August 6th, 2019, Barney NYC filed for bankruptcy, as it could not cover increasing brick-and-mortar operating costs with its sub-par online presence. This, however, is not the case for all companies.
Companies like Nordstrom, Walgreens and even Starbucks are masters of this omnichannel retailing, and it shows as they are some of the leaders in their specific field of retail and all post incredible sales numbers, both online and in-store.
What this means for the future of brick and mortar is that companies must be able to adapt to the changing landscape. If they do a good job, they will be able to exist, just like the previously mentioned companies. If they do not, however, brick-and-mortar stores will ultimately fail, as seen in the case of Barneys NYC. Founded in 1923, it was a leader in retail; however, its online presence was unequal to that of other luxury department stores such as Saks Fifth Avenue and Neiman Marcus. On August 6th, 2019, Barney NYC filed for bankruptcy, as it could not cover increasing brick-and-mortar operating costs with its sub-par online presence. This, however, is not the case for all companies.
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