When the pandemic hit, nearly every aspect of life when virtual. Working, socializing, and, of course, shopping. Pre-COVID, e-commerce was already an integral part of our lives. But, the global shutdown brought online shopping to a new level, with e-retail sales surpassing $4.2 trillion. And with many stores having to shut their doors, it seemed like online would be the way of the future. Surprisingly, it’s not. Retailers across the country are planning to open more stores than closing in 2021 as it’s been found that brick-and-mortar actually fuels e-commerce success.
A new report revealed there was a 40 percent increase in year-over-year store opening announcements despite many business closures. This is partially due to companies’ abilities to shift parts of the business to online sales to create a stronghold in the marketplace, with e-commerce growing from 11 percent of retail sales in 2019 to 14 percent in 2020. These stats are significant, according to experts like Jose Nino, Vice President, Global e-Commerce & Digital Strategy, USPA Global Licensing (USPAGL). Why? Well, retailers that can optimize online and offline experiences have the best opportunities for sustained growth into the future.
A 2019 survey from the International Council of Shopping Centers found that local store openings drive online search volume for that same region. Similarly, search volume for said designated region drops with store closures. Often referred to as “bricks for clicks,” the study found that the opening of a brick-and-mortar location led to a 37 percent average increase in overall web traffic.
Plus, many case studies show the relationship between new retail openings and their online impact within the store’s walkable radius. Examples include improved conversion, average unit retail, and retention rates. USPAGL has a global retail footprint of over $2 billion via e-commerce and over 1,150 stores across 170 countries. They, too, have witnessed an increase in website traffic in new territories where they’ve opened.
“When people have the option to see products in-store, they better understand some of the product’s features that are difficult to articulate online,” Nino told me. “They can feel the product, understand the fabric’s breathability, evaluate how tight a slim fit might be, etc.”
Dick’s Sporting Goods also recently announced they’re building new locations as well as House of Sport experiential stores. Dick’s Senior Director of Technology for Stores and Omnicommerce J.P. White explained that physical stores were vital to Dick’s digital presence and success. Brick and mortar locations add the element of convenience to the purchase funnel. This was especially true during the pandemic as stores functioned as fulfillment centers and a safe way for customers to pick up and return products.
“By having a store near one of your virtual customers, you are taking a lot of the guesswork out of their purchase,” said Nino. “In many regions, we offer a truly omnichannel experience where customers can pick up and return their online purchase from a local store in a more timely manner than delivery. All of these enhancements further support the ‘bricks drive clicks’ narrative.”
In addition to higher conversion rates, bricks driving clicks are driving higher average order values. When customers are aware that they can return the merchandise at a local store, they are more comfortable in completing a larger order basket which also drives stronger margins. And retail doesn’t have to absorb return shipping costs and overhead.
This comes after the retail industry saw a boom in direct-to-consumer (D2C) businesses over the last few years. This “retail reset” took over the past decade leading to store closures that dramatically decreased the physical retail footprint. But, moving forward, it seems brands with a strong omnichannel presence will not only experience an increase in conversion but will have a more productive post-purchase experience.
For example, Prime day this year was relatively disappointing, with a reported 6 percent growth compared to the last event. Meanwhile, Amazon’s competitive peers posted tremendous double-digit comps that week. Retailers like Best Buy, Target, Walmart provided the shopping conveniences–and because of it posted significantly stronger comps than Amazon.
“I think it is a sign of things to come,” said Nino. “The future of retail will be defined by those that execute omnichannel best from both a back end (logistics and operations) perspective and front end (consumer experience).”
