Is online shopping killing Main Street? These 3 facts prove brick-and-mortar retail isn’t going anywhere
June 05, 2019
In this 8-minute read:
- What percentage of retail sales happen in a physical store
- Why the death of retail is an exaggeration
- Online vs. brick-and-mortar retail sales figures
- Why many customers prefer buying from brick-and-mortar retailers
- Why huge eCommerce “sales holidays” don’t affect local business
- 3 tips to help your local business flourish
“It’s a retail apocalypse!!”
With the shuttering of century-old retail icons like Sears and the continuing (some say malignant) expansion of Amazon into seemingly every retail category—auto parts? Really??—many nattering nabobs have predicted the rapidly approaching death of brick-and-mortar retail.
The death of brick-and-mortar retail is an exaggeration
While there is evidence to support a dramatic shift in how customers are buying, to misquote Mr. Clemens, reports of the death of retail have been greatly exaggerated.
To hear the online doomsayers tell it, we’ll shortly be a society of virtual shut-ins, plugged in to the internet 24/7 via biotechnological VR implants, having our groceries and shoes and antidepressants and toilet brushes drop-shipped from online stores, delivered by drones dispatched from benevolent cephalopodic eCommerce blimps hovering perpetually overhead, asking Alexa to order our vegan soy kurma from a delivery-only kitchen via Doordash while our IoT-connected washing machines automatically reorder laundry detergent.
Meanwhile, we will sit comfortably in our WALL-E hover loungers, Netflix-n-chilling while we sip on our cruelty-free organic hemp sodas. Why, it’ll be a paradise! We’ll never have to leave our homes at all!
Certainly, aspects of this bleak existence are sure to come to pass (or are already happening). But here are 3 facts that show that brick-and-mortar retail is not going away anytime soon.
1. 90% of retail sales still happen in a physical store
Fortunately for brick-and-mortar retailers, people still overwhelmingly purchase retail items in a physical store. How many? Well, an oft-quoted statistic from the most recent U.S. Census data is 90% of retail sales happen in a brick-and-mortar location.
Make no mistake, though, online sales are indeed growing. UBS, a Wall Street investment/research firm, recently estimated that U.S. retail comprises $4.2 trillion in sales, and roughly 13 percent ($475 billion) of those sales occur online. That’s up from 3% in 2004, and if the trend continues, e-commerce purchases will reach 20% of the retail total over the next 5 years. Furthermore, UBS predicted that “75,000 brick-and-mortar stores are likely to shut down by 2026.”
That’s a healthy chunk, and it might strike fear into the heart of small business owners. But there is a bright side.
2. Many customers prefer buying from brick-and-mortar retail stores
Even if the predicted 20%-of-sales-online figure is reached, that still leaves 4 out of 5 retail purchases happening in a brick-and-mortar location. What’s more, UBS surveyed 2,500 U.S. consumers and 40% of them have “a strong desire to feel or test products in stores before buying them.” Many also stated they prefer the “instant gratification” of leaving a store with their purchase in hand.
Other sources support this view: Empyr.com says, “73% of all people prefer to try something in-person before they buy.” Ripen.com’s consumer survey provides other reasons why people prefer brick-and-mortar shopping: nearly 30% said they buy from a physical store because they want their items immediately; 14% shop local to save on shipping costs; 17% say shopping offline helps protect their privacy; and 6% like the easier/cheaper returns afforded by physical shops.
In addition, it may seem obvious, but there are certain verticals that just make more sense (or are only possible) as brick-and-mortar locations. Investopedia points out but a few: “hair salons, veterinarians, gas stations, auto repair shops, restaurants, and accounting firms.” There are many others.
3. U.S. retailers are actually opening more new stores than they are closing
Although UBS predicts that around 2% of retail stores will close in the coming year, they are quick to point out that “E-commerce gains do not signal the ‘death of stores,’” and that there is still room for physical retail to grow.
CNBC notes that the bulk of retail closures are happening in less-used malls (or “C-malls”) and that “retailers still value having a physical presence: brands that started online like Warby Parker, Casper and Untuckit are opening hundreds of stores altogether across the U.S.”
The IHL group says, “despite the headlines on store closings, U.S. retailers are actually opening more new stores… than they are closing, with more on the way.”
Obviously, the unique value of a physical location is profound.
How much effect do huge eCommerce sales like Prime Day have on local, mom-and-pop retail shops?
With all the yearly buzz about Prime Day, Alibaba’s Singles’ Day, and Cyber Monday, you might expect them to have a profound, negative impact on local, mom-and-pop retail shops. Not so.
Womply serves over 150,000 small businesses across the nation, and our sales data shows that, far from eCommerce sales holidays eating local retail’s lunch, small businesses barely feel the effects of these sales… and they sometimes benefit from them.
We looked at the most recent “eCommerce super sales holidays” to see if small businesses saw any drop in business on those days. Here’s what we found:
- Overall consumer spending at retail businesses: on par with the average comparable day in the summertime
- Average revenue at open retail businesses on that day: Only 3% less in daily revenue than an average comparable day throughout the year
- Overall consumer spending at retail businesses: on par with the average Monday in October through December
- Average revenue at open retail businesses: 3% increase in daily revenue compared to the average Monday throughout the year
Bottom line: By all measurements these online shopping holidays are “just another typical day” for the average local retail businesses.
Is Black Friday still big for local retail?
Black Friday is undeniably huge for both eCommerce and retail businesses. Below you can see some of Womply’s Black Friday data for the local businesses we serve:
- 5th biggest day of the year
- 64% increase in consumer spending compared to average day throughout the year
- 28% increase in consumer spending compared to average Friday in October – December
- Average revenue at open retail businesses: +79% vs annual average and +61% vs average Friday throughout the year
The 2 days preceding Christmas are even bigger than Black Friday for local retailers, and are the top 2 days of the year.
So, how can local retail compete with the eCommerce giants?
Short answer: you can’t. We’re not saying that in terms of sales volume or revenue or advertising power a small, local business can compete with the likes of Amazon. However, your local retail shop CAN provide unique qualities that a gigantic eCommerce megacorporation can never hope to… and thus ensure your continuing place in the retail biosphere. Here are some ideas.
Capitalize on the “shop local” movement and strive to provide a unique customer experience
Small, local shops are actually growing in popularity, and not just with hipsters looking for free-range, single-origin beard oil. In addition to the advantages discussed above, local businesses can provide the customer service, unique ambiance, positive purchasing experience, and personal touch that eCommerce retailers can’t.
Think about your favorite local store or restaurant. What does it feel like when you walk in? What does it smell, look, and sound like? These are all aspects that online retailers can’t imitate or provide to customers. Make your shop unique and memorable. Work to delight your customers.
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As you work on providing excellent customer experience and a one-of-a-kind, personal purchase experience, and you’ll see that people will pay a little more for local convenience, service, ambiance, and privacy compared to buying online.
Get more involved in your community
When you get involved, you effectively are advertising for your business, and you turn regular customers into loyal fans who will promote your business online.
So get more involved in your community. Host local events. (63% of customers say they want invitations to more local events, but only 12% get them.) Volunteer for or sponsor the local baseball, football, or underwater basketweaving team—whatever locals take pride in. Build a memorable float for the local parade. Find a cause you’re passionate about and get involved. Get creative!
The main point is your business should be inextricably linked with your town, and customers should feel a close connection with you and your business. Small efforts in this area can have lasting impact.
Don’t neglect your online presence
As we’ve written before, a strong online presence is essential for every business today, including small, local shops. Click to read our informative posts on this important business component.
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Womply offers reputation management software, business intelligence software, and email marketing software specifically for small businesses that can save you tons of time while bringing more customers to your door. Click for a free, personalized demo!
Consider “bricks and clicks”
“Bricks and clicks” or “clicks and mortar” are cute terms referring to physical retailers who have added an eCommerce-like component commonly referred to as “online to offline.” For example, a restaurant might purchase software that allows customers to order online or via mobile and pick up their food in the store. This can also work for other retailers of various goods. You will note that big retailers like Walmart and Costco have invested billions in this type of sales model, so they obviously see the value in it.
If you have the capacity and the web resources, and if it’s applicable to your industry, you might consider implementing an “online to offline” business strategy to supplement your in-store purchase experience.
Studies show huge trends in “order online, pick up in store” business models, and if you work to keep abreast of these trends as well as maintaining a peerless customer experience in-store, you can outpace your local competition and stay relevant in our increasingly digital world.
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