It wasn’t all that long ago that many people thought we were starting to see the end of physical retailers as we knew them. And the culprit was the internet and the rise of e-commerce.
But a funny thing happened on the way to that prediction: it turned out to be wrong...very wrong. And not only wrong but in some ways the exact opposite of what was forecast. Today, an argument can be made that e-commerce is actually helping, not hurting the in-person shopping side of the retail world.
“Store owners once viewed e-commerce as a mounting threat to their survival,” according to a recent story in the Wall Street Journal. “Now, more bricks-and-mortar stores are thriving after integrating their properties with the online shopping experience.
“Shoppers browse in person to see, touch or try on items before ordering them online. They are picking up or returning purchases in stores. And retailers are increasingly relying on their shops as fulfillment hubs, shipping items ordered online from store stockrooms in addition to warehouses,” the Journal wrote.
The newspaper, citing data from research firm GlobalData, reported that almost “42% of e-commerce orders last year involved stores, up from about 27% in 2015.”
“There was a narrative that as online grew, stores would become less relevant. But it hasn’t worked out that way,” said Neil Saunders, said managing director at GlobalData. “In many ways, the store is still the heart or hub of retail.”
The Journal story wrote, “Many retailers have found that it is too expensive and difficult to attract and retain customers without physical stores. And using stores as pickup and drop-off points helps lower the labor, packaging and shipping costs involved in online orders. It said that more than a third of Kohl’s online orders are fulfilled in stores and at Walmart, it’s more than half. It said that nearly all of Target’s online sales are fulfilled from its own stores.
“Big-box retailers started building up their store-fulfillment operations and infrastructure for in-store pick-ups and returns before the pandemic after realizing that returns were higher for items bought online and that digital sales were less profitable.
Many retailers have found that it is too expensive and difficult to attract and retain customers without physical stores.”
The integration of in-store and online is now rapidly becoming table stakes for shoppers, the Journal says in quoting Scott Lipesky, chief financial and operator officer for Abercrombie & Fitch. “The customer demands this seamless omnichannel experience where the stores and the digital business are connected.”
While he said stores are still necessary and the retailer expects to open more locations than it closes, “The flagship went from being a giant store to a cellphone and the screen.”