Online retailers are opening brick-and-mortar stores. Here’s why.

You’re probably already familiar with this news — online sales are booming and shopping in retail stores is on its way out. Take a deeper look and you just might be in for a surprise — online retailers are rushing to open retail stores.

Eyeglass e-tailer Warby Parker is opening brick-and-mortar locations in Canada and the U.S.
Vistaprint’s first physical store recently opened in Toronto

Amazon — recently acquired Whole Foods

Alibaba — Chinese e-commerce giant. Recently bid for Intime Retail Group Co. (Owns department stores and shopping malls in China)

Vistaprint — Online provider of business cards and marketing materials. Recently opened Vistaprint Studio — its first brick-and-mortar store

Warby Parker — Innovative eyeglass e-tailer. Continues to open physical stores

If in-person shopping is dying, why are these online retailers rushing to open brick-and-mortar stores? The reason is simple. Physical stores enable retailers to connect with customers in a way that’s difficult to achieve online.

5 reasons why e-tailers are opening physical stores

1. Physical stores enable online retailers to enhance the shopping experience

Consumers can read about products, see photos, watch videos and read reviews however, they can’t see, touch, feel or try a product online.

Neil Blumenthal, co-founder of Warby Parker discovered that customers want to see, touch and try on eyeglasses before buying them. That in-person interaction helps them design unique eyeglasses that resonate with their customers.

Vistaprint recently launched its first brick-and-mortar store in downtown Toronto. Customers can discuss their needs in person with designers and marketing experts and Vistaprint can provide customized solutions, marketing advice and in the process, build relationships with customers and loyalty that simply isn’t possible online.

2. Physical stores are an efficient way to build online sales

It was once thought that brick-and-mortar stores would cannibalize online sales. The opposite was found to be true. In fact, Canadian men’s online retailer Indochino discovered that opening a physical store builds online sales.

“When we open a showroom in a market, online sales in that market grow twice as fast versus markets we’re not in.”

Drew Green, Indochino CEO

3. Physical stores increase brand awareness

A decision to visit a retailer’s website is often made in a fraction of a second. You then have the difficult task of convincing visitors to add a product to their shopping cart, proceed to the checkout and pay for their product.

However, physical stores can use enticing window displays and creative signage to attract customers. Knowledgeable staff can then engage shoppers, learn about their needs and offer customized solutions. That gives the retailer a much longer time to capture and hold a prospect’s attention as compared to a website visitor who can easily browse to another site in a microsecond.

4. Brick-and-mortar stores are more effective at generating sales and profits

There’s little doubt that online sales are growing faster than sales in physical stores. However, consumers who visit physical stores purchase more as compared to those who visit a retailer’s website.1

In addition, a purchase made in a brick-and-mortar store is often more profitable than a purchase made online.2 That’s because shipping and handling charges and other costs associated with increased returns reduce an online retailer’s profit margin.

Online sales are up however, profit margins have fallen.

Profit margins have not kept up with the growth in online sales

Source: Data for 20 publicly-traded companies. Alix Partners, April 2017

Millennials and Generation Z consumers overwhelmingly prefer shopping in physical stores.

Most consumers prefer shopping in brick-and-mortar stores

Sources: Majority of millennials prefer shopping in stores. Despite Living a Digital Life, 98 Percent of Generation Z Still Shop In-Store.

If you’re a retailer, where would you be focusing your resources?

The future of retail? A seamless customer experience that includes physical stores and an online presence

Online sales continue to grow at a faster pace than sales in brick-and-mortar stores. However, the most effective way to connect with shoppers, acquire new online customers and generate profitable sales over the long term remains interacting with customers through a physical store.

“I think the days of being an online-only company are going to be coming to an end, whether that’s three years from now, five years from now or what have you.”

Drew Green, Indochino CEO

Moving forward, success for retailers will likely involve physical stores in strategic locations combined with a seamless online presence that meet customer needs throughout the purchase journey.

About MAPSTED

MAPSTED CORP. is a Canadian technology firm that strives to be the global leader and provider of indoor positioning/location services.

Unlike other indoor navigation platforms, our ground-breaking core localization technology does NOT require Wi-Fi, Cellular or BLE connections. It can be easily deployed in multi-storey buildings, underground floors and other areas that are generally known as dead-zone locations.

MAPSTED offers a smart mall solution that includes geo-targeted mobile ads and comprehensive shopper analytics — all based on our leading-edge indoor navigation platform.

For more information visit, mapsted.com.

Endnotes

1 Five signs that stores (not e-commerce) are the future

2 Five signs that stores (not e-commerce) are the future

Sources

Data for 20 publicly-traded companies. Alix Partners, April 2017

Despite Living a Digital Life, 98 Percent of Generation Z Still Shop In-Store

E-tailers joining the retail world

Five signs that stores (not e-commerce) are the future

Majority of millennials prefer shopping in stores

Online retailers open regular stores