Brick and Mortar vs. Ecommerce: The State of Retail in 2020

By Jasmine Glasheen

You can’t answer the brick and mortar vs ecommerce debate solely based on retailer behavior. This is because, while Pier 1 Imports, Gap, Macy’s, Forever 21, Walgreens, and others are shuttering stores; Sephora, Target, Costco, Dollar Tree and Dollar General, TJX and many more are expanding their physical footprint. 

You also can’t answer the brick-and-mortar vs ecommerce question based solely on customer behavior, because both segments are still growing (albeit at different rates). Take 2019 holiday sales, for instance. Brick-and-mortar sales grew by 1.4% over the 2019 holiday season, while ecommerce grew by 8.1%. 

So, how can you break down the strengths and weaknesses of online vs physical retail? 

Think of it like this: Consumers are making more convenience purchases online, but they’re still making their luxury and experiential purchases in person. High-ticket merchandise categories still call for in-person product interaction, which can only take place in in a brick-and-mortar store. In the fashion category, for instance, over 70% of purchases are still made offline. 

Let’s take a deeper look at when and why brick and mortar stores are still an asset, as well as the signs that you should forego the additional overhead costs by opening an online store. 

Pureplay Gets Physical, Physical!

Pureplay DTC (direct to consumer) brands are one of the biggest, most glaring exceptions to ongoing claims of a “retail apocalypse.” Because here’s the thing… if we’re witnessing the end of brick-and-mortar retail, how do you explain all of the pureplay digital retailers moving into brick-and-mortar in recent years? Whether it’s through collaborating with an existing general merchandise retailer (such as Target) or building out their own branded stores (a’ la Warby Parker), one-time pureplay brands are making a big move for physical square footage.

A significant 30% of direct-to-consumer brands say opening stores is a “present priority.” Digitally native brands are even being brought on to breathe new life into the malls and shopping centers where said “retail apocalypse” is allegedly taking place. Just take a look at Hudson Yards in New York, which recently devoted an entire “Floor of Discovery” to digitally-native and established innovative global brands. (Check out Hudson Yards’ press release to see the full list of brands, eateries, and immersive art exhibitions. It’s inspiring stuff.)

But whenever retailers invest in physical stores in this day and age, there’s always the threat of over-expansion. Ambition and customer demand has to be considered alongside other, less sexy realities about the retail industry (like the fact that the U.S. remains over-stored), in addition to retailers evaluating enough consumer data to determine that there’s a demand for their presence in a given area before they build. 

Yes, this means SMBs, too. Consumer data is a strong point for pureplay digital retailers that branch out into brick-and-mortar, and one of the primary factors––along with strong marketing campaigns, agility, and innovation–– leading to this sector’s growing success in physical retail. 

Online Shopping is Best for Streamlined Searches

Now for a retail reality you may be less than enthusiastic about. Clothing and accessory sales are slowing down––particularly in women’s–– as environmental concerns lead customers to re-wear clothing or to try purchasing from secondhand channels. This doesn’t mean customers aren’t buying clothes (they sure as heck are), but it does mean that more online customers are browsing in search of something specific. It could be the customer is looking for a great deal on brand name or off-brand merchandise, or they’re looking for a particular clothing item (we still aren’t buying our underwear secondhand). 

Identifying why a particular customer is browsing online and making sure they see products that reflect those priorities is a big opportunity for retailers in 2020. 

A smart POS system can help you gather the customer data that you need to personalize each shopping experience. Certain POS systems will even integrate with your CX and marketing software, so you can customize your company’s homepage, email marketing campaign, and social media ads based on customer data. So you can ensure that every single customer sees the type of product they’re looking for when they interact with your brand. 

If your online store comprises a significant chunk of your business, you’re probably already aware of the threat cart abandonment poses to your ROI. Cart abandonment is on the rise. In fact, 69.57% of online purchases were abandoned in 2019. 

To reduce cart abandonment, you need to make the online checkout process as friction-free as possible. This means ease not requiring customers to open new browsers to check out (since customers abandon their purchases when the window takes a long time to load). It also means accepting customers preferred forms of payment, reducing shipping costs, and decreasing the amount of time that your customers have to wait for product delivery, since all of these things can discourage customers from following through on their intended purchases. 

Brick-and-Mortar Stores as Experiential Testing Centers

Brick-and-mortar retail is alive and well, and in order to win, merchants need a presence on both online and physical channels. But the face of physical retail has evolved quite a bit in recent years. 

In the Amazon era, physical stores are no longer the destination for convenience purchases. Brick-and-mortar has become a place where customers test products, interact with brand advocates, and have immersive brand experience. It’s also where they spend the most money, since customers look to brick-and-mortar stores to make their high-ticket purchases. 

Physical stores and pop-ups are as much about the shopping experience as they are about the inventory. Just take a look at Fendi’s recent pop-up at the Nordstrom flagship in New York, which has four “exclusive” custom pieces in addition to the regular inventory. Instead of debating between a physical vs digital retail presence, focus on amplifying the strengths of your physical and digital brand presence to create a cohesive, complementary shopping experience for customers. PWC reports that the number of companies investing in the omnichannel experience has gone from 20% to over 80% in recent years. 

The store of the future is channel-less. It’s no longer about brick and mortar vs ecommerce, but how brick and mortar and ecommerce can together create a one-of-a-kind experience you’re your brand. 

Train your store associates not to view a customer that doesn’t convert immediately as a customer lost––it’s no longer the same thing. Instead, focus on incentivizing customers that don’t buy right away to visit your store on another channel, whether it’s by encouraging customers to follow-up online for a discount off of their next purchase, offering a scannable barcode for exclusive digital content, or giving digital customers a redeemable coupon for a free eye makeup application if they visit your physical store. Keep innovating!