In the age of online shopping, don’t count out brick-and-mortar stores – Sharmila Chatterjee

MIT Sloan Senior Lecturer Sharmila Chatterjee

Sharmila C. Chatterjee, Senior Lecturer, MIT Sloan School of Management

From USA Today

As the unofficial start to holiday shopping approaches, retail prognosticators are calling for a holly jolly season for e-commerce—and a less merry one for brick-and-mortar stores.

This year, for the first time, American consumers plan to do more of their holiday shopping online than in physical stores, according to PricewaterhouseCoopers. A Deloitte study predicts that customers will spend on average $879 online and $541 in shops.

Based on these forecasts, e-commerce appears in prime position to soon dominate the holiday retail landscape. We can kiss goodbye traditional stores. Right?

Not so fast. Brick-and-mortar stores are making a comeback. By focusing on customer service, integrated business models, and innovative partnerships, many chains — including Target, Kohl’s, Madewell and Best Buy — are likely to post strong holiday sales. Meanwhile, e-commerce may be in for a reckoning. Signs indicate that the lightning fast delivery speeds customers have come to expect from internet vendors, namely Amazon, are not sustainable.

Physical stores made an attempt to compete

It’s been a challenging decade for brick-and-mortar retailers. Some background: At the dawn of the Digital Age, stores viewed e-commerce as a threat. To compete, they slashed prices to match their online rivals. Doing so forced them to cut costs: they shed salespeople, stopped investing in training, didn’t pay attention to merchandising, and ignored partnerships and product development. In other words, they neglected to make investments to strengthen their stores. Customers turned away and some of the most venerable brands — including Sears, RadioShack and Toys R Us — filed for bankruptcy.

Today, however, stores have wised up to the notion that brick-and-mortar and online retail can coexist and complement one another. Stores don’t necessarily need to lure customers off their laptops and mobile phones — nor do they need to match the internet’s deep discounts. Rather they must find ways to integrate online and offline shopping and give customers more of what they want. Further proof that physical stores aren’t going anywhere: the growing movement among digital retailers, such as Warby Parker and Allbirds, to open brick-and-mortar stores to heighten brand awareness and power sales.

Best Buy, the big box retailer, is a prime example of a brick-and-mortar chain that’s succeeding in the Amazon Era. The company understands that its physical stores represent an opportunity to create social and sensory experiences for consumers. In addition to renovating its showrooms and providing dedicated kiosks for electronic brands, Best Buy heavily invests in employee learning. All workers receive training, and then must demonstrate that they have achieved a certain level of expertise before interacting with customers. Best Buy views knowledgeable employees as a competitive advantage — one that chatbots can’t replicate.

What’s more, the company has seamlessly integrated its click-and-mortar logistics. When customers order items from its website, the products are sent from the location that allows for the most efficient transport — be that a local store or a distribution center several states away. As a result, Best Buy has speedy shipping times, and enables near instant gratification for customers.

Smart retailers are also investing in new partnerships that bring unique or otherwise hard-to-find items to their stores. Target, for instance, recently began selling Disney merchandise at select stores that was previously only available at Disney-owned retailers. And Madewell, the J.Crew spinoff, teamed with ThredUP, the secondhand online retailer, for a collection of pre-owned jeans. The jeans, which sell for $50, are only available in select locations.

Read the full post at USA Today.

Sharmila C. Chatterjee is a Senior Lecturer in Marketing and is the Academic Head for the MBA Track in Enterprise Management (EM) launched at MIT Sloan. 

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