To paraphrase Mark Twain, "rumors of the death of brick and mortar retail are greatly exaggerated." Although e-commerce shopping continues to grow rapidly, brick-and-mortar stores are still holding up well versus online retail sites, as many people still prefer the in-store shopping experience where they can see and try out products before committing to a purchase.
Brick and Mortar vs Online Sales Statistics
According to U.S. Department of Commerce Statistics:
- Total retail sales rose from $1.38 trillion in Q4 2019 to $1.47 trillion in Q4 2020, a 6.9% increase.
- E-commerce sales rose from $156.39 billion in Q4 2019 to $206.66 billion in Q4 2020, a 32.1% increase.
- As a percentage of total retail sales, e-commerce sales have risen from 11.3% in Q4 2019 to 14% in Q4 2020.
As demonstrated by a 2016 survey from BigCommerce, the preference for shopping online vs in-store tends to decrease with age. Seniors and Baby Boomers are much less likely to turn to online shopping than Millennials and Gen-Xers.
Note that nowadays many purchases involve both digital and physical browsing of goods—often a purchase begins with online research followed by a visit to the store to make a purchase, or conversely a purchase may start with a customer examining the product in-store but making the purchase online. And with the prevalence of smartphones and other mobile devices, shoppers can perform their online research and price comparisons while in the store (known as "showrooming").
Why Customers Purchase Online
Aside from the ability to compare product specifications and browse reviews, online shopping has a number of other advantages:
- Being able to shop 24/7
- Saving money—online shopping allows the customer to compare pricing and find the best possible deals
- Not having to use a personal vehicle and deal with parking and other issues or take transit to shop in-store
- Saving time—in-store shopping can be hugely time consuming, particularly if it involves visits to multiple stores in different locations
- Convenience—many people dislike crowds, cashier lineups, etc. and prefer to shop from home
- Availability—hard to find items are much easier to source online
- Free shipping is sometimes available from online vendors. For example, for a small yearly fee the Amazon Prime service includes free shipping on most items ordered through Amazon.
Why Some Customers Prefer Brick-and-Mortar Shopping
- Being able to physically interact with an item before buying, particularly with personal items such as clothes, cosmetics, furniture, etc. or with grocery items that need to be checked for quality and freshness
- Goods can be obtained immediately rather than waiting for shipping
- Customer service—the ability to speak directly to a sales representative and get further information and advice about products or services
- Avoiding shipping costs
- Avoiding the hassle and complexity of returning unwanted items
- Much faster and easier to return a defective or unwanted product in-store rather than shipping back to an online retailer
- The experience—many people enjoy a shopping outing in retail stores, often with spouses or friends and conjunction with other activities such as dining, having a specialty coffee, etc.
How Can Small Business Take Advantage of Online and In-store Shopping Trends?
In today's market, virtually all large brick-and-mortar retailers also have a strong online presence. For small brick-and-mortar businesses, deciding whether or not to spend the time and effort to expand into online sales is less clear. According to Insureon, only about 29% of small businesses make their sales through the internet.
Given that most people tend to search for businesses on the internet, your business should always have an online presence, even if it consists of a Facebook page or simple website containing your address and contact information, as well as a brief description of your product or service offerings.
If you do decide you want to sell your products online you don't have to go to the trouble and expense of setting up a complete separate e-commerce website. Setting up a Facebook or eBay storefront, or selling through Amazon as a third party, is all relatively simple and serve as inexpensive ways to get into online sales.
Whether or not you have an online presence, the best way to compete with online stores is to build long-term relationships with your customers by providing excellent customer service. Customers enjoy a sense of familiarity. Being addressed by their first name, enjoying a friendly interaction with sales staff, receiving personalized service and feeling that their needs are being met are sure ways to keep customers coming back.
As an example, a good salesperson in a clothing store can be extremely helpful to a customer by providing advice on appearance, sizing, mixing and matching articles of clothing, assistance with fitting, care, and maintenance, etc. Without any customer assistance or the ability to try on an item in advance, the only recourse for an online clothes shopper is ordering an item and hoping that it fits and is suitable, otherwise sending it back by return shipment.