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Bricks-and-Mortar Stores Seek Online/Offline Strategy

As one who grew up during the boom consumer years of the 1950s-1980s, it saddens me to watch storied retail brands in decline. Sears has long been barely keeping its head above water; Macy’s just announced reduced seasonal hiring, even lower than for the 2016 holiday season; and Toys’R’Us filed for bankruptcy. This is on top of news about abandoned shopping malls and more closed retail chains. That said, the press have been trumpeting the death of retail for quite a few years.

Americans are changing shopping habits so quickly that retailers are having difficulty keeping up. It is little comfort to know that a single online retailer, Amazon, the beast of ecommerce, is bricks-&-mortar stores’ only serious competitor. But the rise of mobile devices is applying new pressure to retail practices.

Consumers say they prefer in-store shopping over buying online—for the ability to touch and examine a real product (women), getting an item instantly (men), and to browse and discover new products. And the percentage of people who prefer to shop exclusively online is still well under 10 percent.

Be aware that this year, 84.1% of the U.S. population will be online regularly, and much of that internet access will be through mobile devices. Retailers must start concentrating on mobile interaction if they are going to push back against online competition—and they need to get much better at integrating online and in-store experiences.

Changing Preferences

One trend we find ironic is the curious current preference for outdoor malls that replicate a “main street” shopping experience, usually including mixed use retail, professional and service storefronts. Many of the malls in my home region were originally outdoor malls, later enclosed when throwing a roof over shopping complexes became a trend. Now, the trend is moving in reverse in an attempt to save some troubled malls. Elsewhere, communities are rezoning empty malls for mixed-use, and even turning some into large-scale community centers for activities, events and dining. But that does not address the decline of retailers.

Another trend that has hurt malls and bricks-and-mortar stores is the shift away from shopping as entertainment. In many areas of the nation, people used to head to the mall just to hang out with friends and window shop. This inevitably led to at least some impulse buying, as well as serving to make mall/retail areas destinations for consumers. Today, fewer people visit the mall, preferring to stay home with their devices and surf the Internet. Shipping is no longer entertaining enough to entice people to the mall every week. Have device addictions reduced our desire for casual shopping?

As a mall-frequenter in the past, I blame the demise of mall bookstores. When Waldenbooks and their ilk were bought out by Borders, which preferred free-standing bookstores to mall locations, traffic at my local malls definitely dropped off. My own shopping habits changed to revolve around trips to a new outdoor mall location with a Barnes & Noble. For me, a bookstore is definitely shopping-as-entertainment. The old malls now have little to incite me to pay regular visits.

We’ve also seen the migration of A-level anchor stores away from smaller malls/communities like ours. Those anchor stores still remaining have to compete on price with dollar stores and discount chains, which now seem to be the only kinds of stores mall managers can bring in to fill empty retail spaces.

Why choose online?

Price, deals and special offers are the biggest draw for many online shoppers. In fact, eMarketer reports that, per an Adobe Digital Price Index study, price deflation is happening online and off, but more rapidly online. That is putting added pressure on bricks and mortar stores. But there are other issues than pricing.

In-store issues that continue to harm retail locations include customers’ dislike for waiting in checkout lines. Many retailers hire as few employees as possible, with the result that there are too few clerks working checkout aisles, even at peak hours. Big box stores are adopting self-serve checkout to compensate, but may also consider adopting mobile checkout to speed customers through the purchase process. Another issue shoppers decry is that products they seek are too often not stocked in desired sizes, versions or quantities. Retailers need to step up and assist customers by special-ordering out-of-stock items, and offering notifications for when popular items are in-store.

The Offline Response

A certain amount of “showrooming” is still happening, but retailers are learning how to incorporate interactivity into store environments, providing internet-connected kiosks for in-store ordering, unboxing products so customers can examine them, and offering interactive stations where people can see customer reviews or check product features, options and offers. Another possibility is to offer in-store returns to online customers. (American Eagle has been doing this for years, and will also order items for you online if they do not have them in-store.) In a recent survey, 73% of shoppers cited returns as the least favorite part of shopping online, and 28% said the possibility of dealing with returns deters them from buying online. Retailers who figure out how to appeal to people who want the best of online and offline shopping are likely to be the leaders in retail innovation and customer loyalty into the next decade.

The era of online and mobile shopping is eliminating one more public space where we used to find community and commonality. I somehow doubt that having fewer retailers will result in a better customer experience. Less competition is seldom a good thing for shoppers’ wallets, and we’ve seen how customer experience suffers in a monopoly environment (see any U.S. airline or cable company…). So pardon me if I shed a tear for the end of enclosed malls and destination shopping. Here’s hoping at least some retailers figure out a new operational strategy. 

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