Physical stores remain (and always will be) a vital back-bone to the retail industry, according to a recent GlobeSt article.
As the covid pandemic came to a close over a year ago, consumer preferences began to return to normal. Shoppers started to crave human interaction in an in-store setting, straying away from e-commerce and its increasing frictions.
Online sales have slowed, while brick-and-mortar retail had the upper hand, creating an opportunity to directly cater towards communities, uplifting spirits post-pandemic and reinforcing the idea that physical retail is here to stay.
“It’s an important part of the community. You get a lot of essential items from these retail properties. There’s daily activation at these properties and they’re essential to daily retail habits. Core retail is important in that sense. That’s one reason Walmart has been able to compete with Amazon, because they have the physical footage,” said Emily Arft, a Senior Associate at Green Street covering the mall sector.
Many sole e-commerce players have even relied on brick-and-mortar to save them from the hardships of DTC, including increasing costs and an oversaturated market.
“If you’re a pure play e-commerce, it is expensive and time consuming to reach people. You have to do the paid ads, the targeted ads, and Google and others are saying ad spend is being cut. For a store, it’s front-of-mind for somebody walking past it. they’re paying rent for that space, but not advertising for it,” said Stephanie Cegielski, Vice President of Research at the International Council of Shopping Centers (ICSC).
Brick-and-mortar has become the bread-and-butter for all retailers, and the key to success to form a successful omnichannel approach. Stores are advertisements that pay for themselves. A physical element and online come hand-in-hand for overall success.
“For a store, it’s front-of-mind for somebody walking past it. They’re paying rent for that space, but not advertising for it,” Cegielski added. “We studied it in 2018 and will study it again, but we found that if a store opened in a market, their online sales in that market increased 37%. We found that if a store closes in that market, online sales decrease 33% in that market. It’s out of sight, out of mind.”
As ironic as it is, physical retail stores offer the convenience that e-commerce was supposed to solve. Creating an atmosphere that can’t be replicated online, and allowing customers to walk away with what they need that same day.
“There is value to having that store there to make it quick,” said Cegielski. “We all want free shipping, we want it quickly, but sometimes it’s worth driving 30 minutes to do it all once.”
Not only do people want convenience, but they want an experience. In fact, shoppers are reliant on it. Today’s consumers are hungry for experiences. Dining and entertainment are two easy ways to compliment and add even more value to retail hubs.
“I think the best barometer is really dining and entertainment,” said Joseph Coradino, CEO of PREIT, a Pennsylvania REIT with retail properties across top metropolitan areas. “We’re seeing 20% increases year over year, 22 over 21. That number in some of our properties goes over 40%. People are getting out and they’re shopping, dining, entertaining, they’re out there.”
A physical-first mindset has continuously proved to create a bright future in retail. And with this further reinforces the idea that brick-and-mortar is far beyond an antiquated way of doing business. It is the skeleton in which a retail business strives and thrives.
Source: Retail’s Bright Future – GlobeSt
Photo Credit: Retail’s Bright Future – GlobeSt