After a decade of traditional retailers scrambling to establish online stores, the tide has turned.
Now a growing number of online retailers are rushing to establish a physical presence.
This was no better illustrated in February when the world’s largest online retailer Amazon opened its first shopfront in the US.
That same month in Australia, the now 20-year-old e-commerce website eBay announced a “click-and-collect” partnership with Woolworths that allowed items purchased on its website to be picked up in the supermarket chain’s stores.
Aside from the rise of click and collection points, many of which have now been rolled out in GPT-managed shopping centres, numerous online brands are now opening storefronts where customers can sample their wares and even get some advice. Online retailers have also been a driving force behind the growth in pop-up stores, which have helped build awareness of their brands.
Suddenly, it appears pure online retailers are seeing the need of having a physical presence, just as traditional retailers have for years been forced to embrace the virtual world.
Apart from allowing customers test products or luring consumers who not usually shop online, storefronts are also acting as mini-warehouses where online retailers can reduce shipping times and costs to customers who order nearby.
There is the even prospect that retailers in Australia could soon deliver products ordered online to addresses near their physical stores or warehouses – much like a pizza delivery service. Online retailers in Australia, such as The Iconic, are already offering delivery times of less than 3 hours.
The trend for consumers wanting same day delivery is actually giving bricks-and-mortar retailers an advantage over traditional online retailers who are often required to ship items long distances.
There is also mounting evidence that physical shopfronts, where people can browse and inspect products, can actually boost online sales for the same retailers.
One retailer that seems to have understood this for some time is Apple. The iPhone maker has for the past two years been aggressively rolling out its stores (to now more than 450 worldwide) where people can play with its products and get advice. And maybe order online later or through their mobile phone provider.
A study published in 2011 found that physical stores could boost the revenues of online retailers “among customers contained in the firm’s customer database” by 20 per cent. It found the addition of a new retail channel resulted in more frequent contact between a shopper and retailer – whether that be online or in-store.
In 2013, the UK department store chain John Lewis also noted the opening of a new store usually resulted in online sales in the surrounding geographic area immediately jumping by 20 to 40 per cent. The same retailer saw “click and collect” deliveries take up more than half of its online orders last Christmas.
There is also strong evidence of this phenomenon occurring in Australia.
Physical stores also offer something that websites cannot. They are places where retailers can connect and have a more personal connection with their customers.
“People will increasingly visit physical shops for advice, services, experiences and interaction with other people,’’ says the CSIRO’s principal scientist in strategy and foresight Stefan Hajkowicz in his latest book on global megatrends.
“In an online world with ubiquitous 24/7 delivery of just about any service or product on demand, people will crave experiences involving social interaction and emotional depth,” says Hajkowicz, who in 2013 co-authored a report with GPT on the global megatrends that could impact the property sector.
The New York University professor and founder of research firm L2 Scott Galloway has called the end of “pure-play” retail, arguing the future is in multi-channel retailing.
“Pure-play retail is going away. E-commerce companies are either going to open stores or go out of business and retailers need to be excellent at digital or they will go out of business,’’ he said.