First the digital revolution took our DVDs, then it decimated our newspapers, and now it is after our most beloved shops. It’s actually a good thing depending on your perspective, but a study compiled by PwC in the Netherlands estimated that over two million square metres of retail space in Dutch urban areas will become redundant by 2020; that’s 17%–21% of the current square footage and one in five shops gone in less than four years. It can feel like a whole world of merchandise is being erased by the unstoppable force that is the Internet.
Benefits of online sales
It’s hard to argue with the direction things are going when the benefits of online sales are so obvious: the goods you want, delivered to your door, without the hassle of actually shopping. What is more, the offerings are frequently cheaper as retailers save on staff and rent.
Traditionalists argue that the quality of service associated with non-digital shopping outweighs the efficiency perks of browsing online. They point to specialised staff and the tactile possibilities of in-store sampling. Technological developments, however, such as virtual changing rooms and personalised shopping suggestions are closing the gap, and free delivery rounds out an attractive offering.
While the demise of the physical store continues apace for now, retailers can stem the tide. Marketing strategy can be geared towards getting shoppers into the store. Even a few years ago a survey of mobile users noted that over the course of a month 74 per cent of shoppers made an impulse purchase while in a shop, compared with 65 per cent online. In-store coupons and in-store pick-up following an online purchase are good incentives.
Long-term strategising, however, may require a more forthright approach. Competing in a digital world will entail a wholesale redefinition of the in-store strategy. This may involve downsizing, but it doesn’t have to. There is virtue in reframing the shopping experience as a luxury instead of a necessity. Some, like Apple, are embracing the concept of flagship stores, which are more about promoting the brand than selling product.
Look for the increasing popularity of more flexible shopping options: pop-up stores allow for those first steps into a new market while avoiding hefty rental costs.
Given the pace of change, it is difficult to know quite what the online–offline landscape will look like, but we can surmise that the most innovative enterprises are the most prone to thrive in this new, unknown, technologically driven world.