• Brandminds 2019

Online versus offline retail war ending soon?

“2018 will mark death of online versus offline retail war”, said Mariam Asmar, McCann London’s strategy and innovation director, for Campaign UK.

What is for certain is that both worlds willcontinue for sure to exists for a good while. In a demanding night and day economy, consumers want access to shopping at all times. They want to use price comparison sites, they want infinite choice in styles and sizes and they want to do it all from the comfort of their own home without the pressure of three different sales assistants hanging around waiting to bag some commission.

At the same time, “physical brick and mortar stores will continue to have a place in a world that still requires, and desires, human connection. The current statistic is that 90% of purchases in the UK are still made in store, while 60% of Generation Z consumers value the store experience. Millennials even want to shop in places they can touch, feel and see their product. Not to mention for some, shopping is an experience and they appreciate input and care from the staff and in store experiences,” wrote liveandbreathe.com.

Last year, in the USA, according to “The Atlantic”, online shopping was having an offline moment, as more e-commerce companies, such as RentTheRunway and Bonobos, invested in the physical stores they once made seem obsolete. Leading the trend is Amazon, the undisputed king of online shopping, which spent $14 billion to buy Whole Foods and its nearly 500 physical locations. “According to internal documents, the company believes there is support for another 2,000 Amazon Fresh–branded grocery stores. This throwback revolution is happening in the midst of what otherwise feels like a “retail apocalypse.” Bankruptcies are rising among clothing chains, like Wet Seal, and retail icons, like Toys “R” Us, which are stuck with a glut of shopping space and squeezed between stagnating sales and large debt obligations,” wrote “The Atlantic”.

While Amazon did make a bigger splash with its $13.7 billion investment, Walmart beefed up an e-commerce stable that already includes the acquisitions of digital natives Jet.com, Shoebuy, ModCloth and Moosejaw. Collectively, these M&A deals have set Amazon, the world’s largest e-commerce company, on a direct collision with Walmart, the world’s largest retailer, to be the “everything store” in an omni-channel world — where consumers no longer distinguish between shopping online and offline.

In the future, Amazon could upgrade Whole Foods with innovative retail technologies in use at its fully automated experimental store, Amazon Go, where shoppers pick up their food and leave. There are no cashiers or checkout lines. Amazon tracks what’s taken, or put back, and charges their accounts.

Moreover, “several brick-and-mortar companies with large footprints are struggling while e-commerce companies that once launched pop-ups as mere marketing tools have realized the value of storefronts,”considers The Atlantic. For instance Amazon sees a growth in online shopping in regions where it’s opened a physical store, according to CNBC. “Five years from now, we won’t be debating whether ‘e-tailers’ are taking share from ‘brick & mortar retailers,’” Citi Research analysts recently wrote, “because they are all the same.” The trend even comes with an inevitable, and regrettable, catchphrase: “bricks and clicks.”

“Among the nation’s top 300 malls, brick-and-mortar space occupied by retailers that started online has grown by approximately 1,000 percent since 2012, according to the real-estate data company CoStar Group. While they currently account for a minuscule part of mall volume, landlords increasingly consider them critical to attracting Millennials to these malls in the first place,” adds “The Atlantic”.

In India, another big and important country, according to blog.markgrowth.com,  “the FMCG is vertical: 90% of sales happen via mom and pop stores (Kirana) which are plenty in number. The remaining 10% of sales is accounted for by Modern Trade outlets ( Large Retail format stores similar to Walmart ) and the online channel. Now, these mom and pop stores are not going to go anywhere ( Over 10 million outlets in every nook and corner of the country!). Technology will aid these stores in the near future which will arm retailers with data regarding consumption patterns for instance, which will prevent stock-outs leading to an enhanced experience on the whole.”

More about the e-commerce in India and the classic retail industry one can read here and here.

Meanwhile, in China, according to www.scmp.com, malls are starting their own digital stores as they hitch their bandwagon to the concept of “new retail” pioneered by the Alibaba Holding Group chairman, Jack Ma Yun. The “online-offline integrated experience” is increasingly being used by Chinese retail property operators, who see it as a critical way of gaining insight into consumers’ shopping patterns and responding to these quickly.

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