Why Brick and Mortar Stores Aren’t Going Anywhere
Brick and Mortar

Why Brick and Mortar Stores Aren’t Going Anywhere

Brick and mortar stores were supposed to be finished. The future of retail is online, industry experts have been saying for a while now. And sure, it’s true that consumer habits have changed, and we all know of traditional retail businesses - large and small - that have suffered from the ‘Amazon effect’. The low margins and convenience of internet shopping have made it seem like just a matter of time until traditional stores were a thing of the past.

Here’s the thing: it mostly hasn’t happened that way. As we head into 2020, the ecommerce sector is hovering at around 12% of total retail sales (Statista). Brick and mortar businesses still dominate the marketplace - and some are even experiencing something of a revival. Think about this: the biggest ecommerce giant of all, Amazon, is now actually opening its own physical locations. Americans clearly aren’t finished shopping the traditional way and understanding the reasons why can tell us a lot about what customers are looking for.

Online Retailers Have Some Built-in Advantages

It’s easy to see why ecommerce has seemed such an unstoppable force. Online shopping is just so simple - consumers can choose from a virtually unlimited selection of everything, without even leaving their homes. And the money online retailers save on overhead they can pass on as savings to customers. As for the biggest natural advantages of brick and mortar stores - being able to actually see what you're buying - ecommerce has an answer, with free delivery and returns. And then there's 'Showrooming' - trying out goods in a store then purchasing them for cheaper prices online. It's hard to see a downside for shoppers, so what keeps people coming back to (and spending money in) brick and mortar stores?

The Power of Experience

The resilience of brick and mortar stores can't be explained by just one factor. Some sectors - like airport retail, currently thriving - just don't translate to ecommerce. Similarly, even though delivery is easier than ever, consumers are still choosing to shop for groceries in-store, where they can check the freshness of perishables for themselves. Online sales make up less than 7% of total U.S. household spending on groceries, according to industry experts Brick Meets Click.

Across all sectors, though, brick and mortar stores maintain one crucial advantage over online shopping - the experience. It doesn't matter whether it's trying on outfits or a weekend trip to the hardware store, shopping is not always just about buying stuff quickly. Sometime, shopping the old fashioned way can be an experience, not unlike hunkering down at your favorite coffee shop and reading a book on a rainy day.

This is especially true for the young (and young-ish). Seventy-two percent of Millennials would rather spend money on experiences not materials goods (Harris Group), and this preference also impacts how they like to buy goods. If a brick and mortar store can make shopping an experience itself, Millennials won't just shop, they'll be prepared to pay a premium.

A Store's Most Valuable Resource

At the heart of making shoppers' experiences special are a retail business's most valuable resource - staff. The knowledge and expertise of those who work in brick and mortar stores - whether they provide advice or just a smile - are what sets them apart from online rivals.

Consumers prefer shopping in stores, but it works the other way around too. Staff at smaller businesses report higher engagement than those who work in large corporations (Dale Carnegie). Working at a small brick and mortar business - and getting to know consumers and their needs firsthand - is going to be more satisfying that being a small cog in a multinational distribution chain. And here’s where it gets really interesting.

A Virtuous Cycle

Higher employee satisfaction is a good thing itself - it raises both productivity and profitability (Gallup).

However, it also raises another important metric… customer satisfaction. A Glassdoor study found that a one-star improvement in employee satisfaction predicted a 1.2% increase in customer satisfaction. For industries like retail with high customer interaction, that turns into a 3.2% increase. Basically, if staff are happier, customers are happier too - and if customers are happier, they’ll keep coming back to brick and mortar stores.

A Future of Bricks and Clicks

The small-store experience is powerful. So, it’s no surprise we’re seeing a new Amazon effect - ecommerce giants opening brick and mortar stores of their own. Omnichannel retail - ‘bricks and clicks’ - offers the best of both worlds. A physical presence allows these companies to humanize their brand identity and give customers memorable shopping experiences, all while maintaining the value and convenience of their online platforms.

Where does this leave small brick and mortar businesses? It brings added competition, sure, but at least it’s now in a marketplace where they are the experts - providing great shopping experiences. And after decades of being told that internet shopping was the future, the news that online stores are now trying to replicate rather than replace the small-store experience, the future for brick and mortar businesses is looking bright.

Bottom Line

Small businesses are only as good as their people. For brick and mortar stores to succeed they need knowledgeable, engaged employees, and great leaders. Learn more about how to engage, grow and develop employees by visiting Paycor’s HR Center of Excellence.

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