Can Brick and Mortar Compete with Online?
If I had to rank the questions I get asked each week in order from most often to least, at the very top of that list would have to be "can brick and mortar stores compete and survive?". If you follow my twitter account (@hudsondead) or read any of my articles or interviews, I have been a very strong proponent for brick and mortar over the last decade.
The fascinating part is that over the last few years, my quotes have gone from the "crazy person still hanging on" list to the "futurist who gets it" list. In other words, media would ask for a quote and if the journalist had decided brick and mortar was dead, they would use my quote for proof that there were still some crazy people out there.
I remember sitting on a panel in 2010 with four other guys. All of the panelist (save one) predicted the doom of back and mortar. In fact, they advised people who had stores to diversify and look to morph their operations into online businesses. I was the lone ranger that day. Part of it was due to the fact that I was the only guy who came from stores and the others were all tech guys, but honestly, its because I talk to people and people tell me a different story.
Forrester completed a survey in November of 2014 asking people their shopping preference between online and in store. 2/3rds of the respondents said they still prefer stores. Another report focused on millennials (you know the tech-appendaged generation) and again, the overwhelming majority said they prefer stores. So, if people prefer stores, then why are stores in trouble?
Here is the rub - I believe brick and mortar stores are in trouble, but not for the same reasons as others. I have been part of another research project started in 2014. We asked retail customers a very simple question - "how likely are you to return to a store if they meet your expectations?" To this day, we still get a 49% likelihood response. That is scary. Customers are saying even if their expectations are met there is only a 50/50 chance we will see them again. Why?
You see online retail can meet expectations. But what customers today are looking for is to have their expectations exceeded - it's what we have always wanted. The problem with back and mortar retail is that if the experience is no better in the store than online, what is my motivation to get out of my pajamas and come see you? And don't be fooled, people do not shop online solely because of the price. Survey after survey has shown people will pay more for service, but ask yourself this:
If every experience is the same (brick and mortar and online) what will you use to make your decision?
For many, it is price and thus the misguided belief that price is the only reason people shop online. But the fact is, if I can get an exceptional experience in a store, I will ignore online. Don't get me wrong, I will still use it for research, but it is almost reverse showrooming where online becomes the driver, but the purchase is in the store. But the truth is all of us have purchased online by now. And we all have had bad experiences doing so. So we have learned that online is not the answer. So we continue searching.
Are you engineering experiences in your store that are exceeding expectations?
More money has been put into brick and mortar store development in the last 12 months than in the prior 6 years combined. The biggest online retailers like amazon.com have now opened brick and mortar stores. Does all this mean stores are alive and well? No way. If the experience in these stores is not exceptional, then we are telling our customer they might as well shop online. We are in a very dangerous zone where stores simply become warehouses for online retail. And the pace at which retailers are trying to develop omnichannel capabilities is staggering. But it still comes down to people.
People would rather buy from people. It's just that simple. That will never change.