Trends In Brick And Mortar Retailers During The Holiday Season

 

Everyone has anticipated that the boom of e-commerce will bring the death of brick and mortar. Contrary to popular belief, data is showing that storefront foot traffic isn’t falling as much as expected. Foot traffic at in-store locations is especially high during the holiday, retail therapy, the immediacy of bringing products home, and to see Santa in department stores.

 

In 2017, even though online retail stores rose 14.7% to $108 billion, nearly 87% of holiday sales came from brick and mortar stores. A lot of this was because of the omnichannel experience, where online stores have physical storefronts and physical stores sell through online channels.

 

So what’s really going on with physical storefronts? How are e-commerce sites impacting the brick and mortar world?

 

1. Doors are condensing.

A lot of major retailers have been undergoing major storefront closures. But the common misconception is that this is happening because business is going so poorly that they can’t stay afloat. For some businesses, this is the case, but for a lot of retailers, it's the smarter business move.

 


For example, Macy’s, Sears Holdings, American Apparel, and the Limited all closed locations this past year, but it wasn’t because they were on their way out of business. Each of these major retailers found data to back their strategic closures. They found that loyal customers of these big box stores are willing to drive double the distance to get to the nearest store. These retailers weighed the costs and benefits of these brick and mortar locations and decided that they wouldn’t lose customers. Each retailer saved significantly on overhead generated by owning a large physical space.

 

It’s not that retailers are forgoing their storefronts for online shops. They’re simply condensing to the most strategic doors.

 


Gift bag

 

2. Stores are suffering from middle child syndrome.

Foot traffic data shows that high-performing brands with physical storefronts are on either end of the spectrum: bargain and high end. The rest are getting lost in the shuffle.

 

Bargain or discount retailers like Dollar Tree, Marshall’s, Costco, and Big Lots are rising quickly in physical stores. This is likely because customers want to buy cheaper items when and where they need them. They don’t want to wait for a box to come in to get their essentials. They also don’t want to be charged for shipping on low-price items, especially if they need those goods fast.

 

High-end brands are also on the rise. Storefronts like Lord & Taylor, Saks Fifth Ave, Neiman Marcus, and Nordstrom’s are implementing innovative tech strategies to capture new customers and excite existing ones. The higher-end client still wants the personal feel of a storefront, especially for clothes and accessories, so these retailers are learning to create a more unique store experience to get more people in the door.

 

The middle-range players are being squeezed out the most. These companies have to shift their marketing tactics to figure out how to catch customers based on urgency, pricing, and convenience. A lot of the middle-range businesses are moving online or to more omnichannel functionalities to reach the online customer as well.

 

Read: 5 Definitive Ways To Build Your E-commerce Brand’s Voice

 

3. Brick and mortar stores are selling later into the season.

For the holiday season, a lot of brick and mortar stores are taking advantage of last-minute sales. E-commerce purchasing has some lag, but physical storefronts allow customers to bring their products home directly after purchasing. A lot of consumers aren’t willing to pay high rates for overnight or fast shipping, so they’d rather drive a few minutes to get their goods right away.

 

This is especially important during the holiday season when people are frantically buying last minute presents. Forgot to buy a gift for the holiday party you’re attending tonight? You can stop at a store on the way. Want to get a few more stocking stuffers for the kids? You can go shopping to find extra little trinkets in local stores.

 

Conversely, E-commerce stores are focused on selling products earlier in the season. This means they’ve focused on instilling a sense of urgency to grab customers before they need those last-minute gifts. This is where online stores can increase the units per receipt before customers even start crossing items off their guest list.  

 

E-commerce stores win at the beginning of the season while brick and mortar stores see more success towards the end.

 

"In 2017 nearly 87% of holiday sales came from brick and mortar stores."  -Click to Tweet-

 

4. Physical stores are offering price matches.

One of the largest obstacles for physical storefronts is the consumer’s mobile accessibility. Customers are coming in-stores to check out and play with products, but then they’ll go on their phones to research other products. They’ll test the products beforehand, and then they’ll do online research on their mobile devices to check out competitors. They will even test the products in person and go home to purchase online.

 

This makes it challenging for storefronts to beat their competition since customers can instantly see competitors’ prices. To overcome this, a lot of stores are starting to price match. If you find a cheaper price while in-store, the store will match it. This makes customers more likely to purchase because they know it’s the cheapest price and the product is already in their hands. This encourages the same level of urgency that e-commerce stores promote.

 

5. Storefronts are winning on experience and personal connection.

Online stores are struggling to compete with the experience that customers can get in-store. Customers can walk into a store to try on a shoe or a bathing suit before purchasing, and they’re met with knowledgeable sales associates who offer a personal touch. This is a lot harder to simulate online, which means that customers who want a holiday shopping experience almost always have to shop in-person.

 

This doesn’t mean e-commerce stores aren’t getting their piece of the pie. Beautiful images and videos that show off products are a great way to give customers the “feel” of the product as if they were holding it in their hands. Online stores are also beginning to try out physical pop up shops to meet and match this sort of intimate, unique experience.

 

It’s important to note that brick and mortar stores are often able to upsell their receipts better than e-commerce stores because of this personal relationship building. They have sales associates trained to convince customers to buy more, and they can even put small trinkets near the register for impulse buys. Customers are already in-store, so they figure they might as well pick up a few extra things. It’s harder to upsell customers from such a “distance” online, so e-commerce instead focuses on the urgency of the sale rather than the number of items on the receipt.

 


Person with gift bags

 

6. Omnichannel businesses are the ultimate winners.

Physical locations and e-commerce shops are both doing well, but they function in different ways. While e-commerce is early season, brick and mortar is late. While e-commerce pushes urgency, brick and mortar push relationships.

 

This doesn’t make them competitors… It makes e-commerce and physical storefronts the perfect duo. Businesses that are doing both are the ones that are seeing the most success. This even includes Amazon, which has started moving into storefronts with Amazon Go and AmazonFresh.

 

The “omnichannel” approach is taking the retail industry by storm. This pairs the online and offline stores to streamline operations, capture more of the audience base, and outpace other players. This is especially critical for the holidays when the competition is fierce and customers are fiercer.

 

Bottom Line

E-commerce isn’t killing brick and mortar in the near future. The two are finding a way to coexist and ultimately benefit the merchant and buyer in different regards. Omnichannel companies that utilize both strategies can grab a greater share of the market during the holidays. Foot traffic and web traffic are both strong, so do your homework and see which can work best for your business.

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