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Bricks-and-mortar stores need to adapt to extreme change

In today’s competitive climate, the effect of store closures is being felt in shopping malls and high streets across the globe, calling the future of physical retail stores into question.

The rise of e-commerce, offering easy, convenient and personalised shopping, predictably means some bricks-and-mortar stores are finding it hard to create a user experience that sets them apart from competitors.

In Australia, there have been concerns about the impact of global e-commerce players on our local retailers, with well-known brands such as Marcs, David Lawrence, Pumpkin Patch, Payless Shoes and Herringbone collapsing their physical stores.

Coles, Woolworths, Harris Scarfe and Target are among the large retailers that are now opening smaller stores as a way to survive amides rising costs and competition. Dubbed rightsizing, the industry-wide trend allows retailers to maintain a brick-and-mortar presence at a more affordable price.

The trend also suggests there is simply too much physical space in an era when bulk and basic purchases are increasingly made online. This applies across the board, but particularly among larger department stores, where differentiation appears to have been neglected in the rush to land grab.

But predicting the death of physical retailers would be naïve. Instead, we should be asking why some retailers are not coping in the current climate, and more importantly, what customer experience learnings can be taken from e-commerce stores to help draw in loyal customers in store?

Physical retailing is incorporating new thinking from e-commerce.

Bricks-and-mortar stores have typically had an advantage over e-commerce when it comes to fit and experience. Customers typically find that shopping in a physical store is more reliable, more tactile and more engaging than simply buying a product.

With that said, online retailers also have several advantages over physical stores. In more ways than one, each can learn from the other.

Fit is a major hurdle for online retailers, with return rates sitting around 28 per cent. Millennials in particular are buying many items online and trying them on and choosing what to keep in the comfort of their own home. The lack of standardized sizes is resulting in excessive returns, however, new 360-degree viewing software, the rise in complimentary return policies and new labeling technology are improving the situation.

Further to this, showrooming is becoming an increasingly prominent trend affecting bricks-and-mortar stores, with a recent study showing almost one in three Aussies admit to checking out a product or trying on a garment in store before purchasing it online at a cheaper price. The solution? Stores need to evolve a more relaxed approach to the practice. Placing a greater emphasis on display and knowledgeable sales staff will make a tactile experience more enjoyable for consumers, and lead to an increased chance of a physical sale while the customer is in store.

On the other hand, we have webrooming, where consumers research products online before heading to a bricks-and-mortar store to purchase. Consumers who webroom enjoy the integration of e-commerce with the tactile in-store experience. They don’t want to wait for their purchases to be delivered, and they don’t want to pay for shipping. Most of all, they like to touch and feel a product before buying.

Online retailers can provide a similar customer experience by enhancing the fun of online shopping through innovative technology, including 360-degree viewing and personalised-fit visuals like eBay’s magic mirrors. They can emulate the spontaneity of in-store shopping through the use of programmatic to suggest which shirt that goes with which jeans and sponsored products. And it goes without saying they should be always on, especially during holiday times.

Physical retailers can enhance their offering by leveraging pop-ups within stores for product sampling and personalised exclusives, from coffee shops to interactive product stations. This provides a unique experience that will not only get customers into stores, but encourage them to make purchases in-store, rather than online.

E-commerce fashion retailers are looking at the latest trends to turn negatives into opportunities. If online can’t be tactile, it can be more engaging. Videos, curated collections and storytelling about how to wear collections and the brands themselves are on the rise.

Despite the chatter about the death of bricks-and-mortar retail, in reality, physical and online retailers can learn from one another about providing a tactical and enjoyable customer experience, leading to increased sales and customer loyalty. Physical stores are here to stay, as long as they adapt to the changing landscape and innovative customer demands.

Pressy Sankaran is head of Criteo ANZ.

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