We are witnessing an epic battle in the retail industry right now. In one corner is the tried, tested, traditional brick-and-mortar retailer. This heavyweight champion has ruled the roost for years and is poised to defend its stand. The contender? Still a relative newcomer to the ring, but with an already impressive success record to its credit, the rising superstar of the retail industry and rumored to be the future of retail! (Hint: it’s ecommerce.)
So who’s winning the battle for customers’ hearts and wallets? Let’s go round-by-round to analyze this dogfight.
Round 1: Statistics
The latest report released by the U.S. Department of Commerce on quarterly ecommerce sales for Q4 2013 saw a growth of 3.4 percent over Q3 2013. On the other hand, retail sales only grew 0.6 percent in the 4th quarter. Q4 2013 ecommerce sales grew by 16 percent compared to same-quarter sales in 2012; however, retail sales saw a growth of only 3.8 percent in same-quarter sales for the previous year. Most telling: e-commerce’s contribution to overall retail sales grew 6 percent during the fourth quarter of 2013. This seems to be a staggering growth when compared to the statistics 10 years ago, where ecommerce contributed only about 2 percent to the overall retail sales in the U.S. Here’s proof:
Round 2: Influence on Consumers
According to the U.S. Cross-Channel Retail Forecast, 2012-2017 report by Forrester Research, 60 percent of all U.S. retail sales by 2017 will involve the internet. This may be as a direct purchase through ecommerce or buyers being influenced to buy the product during their research on a laptop or handheld device. Wow!
According to the report, internet research highly influenced categories, include: grocery, consumer electronics, apparel and accessories, and home improvements. However, there are still some items that people may research online but prefer buying through a retail store. These things include groceries, home improvements, and furniture. If retailers can think outside the box and still influence customers to visit their stores, the odds may work in their favor.
Winner: Brick and mortar
Round 3: The Experience
If there’s one thing that ecommerce retailers have done right in recent years, it’s the technological advances they’ve made to make the customer experience as seamless and personalized as possible. Whether it’s remarketing efforts, product recommendations, or customized offers, ecommerce can make any customer feel like a VIP.
Brick-and-mortar might appear to have the advantage since it’s a physical experience, but most B&M retailers haven’t perfected the art of making customers feel special. Rewards clubs, members-only shopping sales, and customized coupons based on purchase history are some of their steps, but I still feel like online retailers make up for their lack of physical presence.
Although ecommerce is the future of retail, brick-and-mortar is still hanging tough (and for some consumers, it is still their channel of choice). While I think that ecommerce wins this fight on paper, it’s definite that the two channels will coexist – and even intertwine – for years to come.