Do you know what are brick and mortar stores?
If you answered “no”, I will tell you something: You probably do. You are just not familiar with the unusual name. Brick and mortar stores are nothing more than the traditional concept of a retail store, a grocery store or a bank. It is any store that has a physical building, for example, Myers, Coles and St. George Bank. What is important to add is that, on the era of the internet, these companies are now present not only on-site, but also online!
According to the “2018 eCommerce Industry Paper” that was recently released by Australia Post, online shopping represented 8% of retail sales in 2017 (a growth of 18,7% compared to the previous year). This number is 16.2 percentage points higher than traditional retail sales. The top three categories Australians are buying most online are: Electronic devices, clothes and books. Still according to the study, the top trends on online shopping were: Buy now, pay later (BNPL); Marketplaces; Checkout at mobile devices; and Online sales events (e.g. Black Friday).
But what happens when a company decides to completely abdicate to have a brick and mortar store and exclusively offer online shopping? That is the case of the OnePlus’ phones – they are only available for purchase online and have lots of positive testimonials, loyal customers and international media cover. Although, despite having good reviews, the number of sales are still not huge. The reason could be the absence of a physical store. Specially when the product is competing with giants of the technology sector, like Apple and Samsung, that have 500+ location stores, not to mention the resale of their products by department stores like Best Buy.
On Fall 2016, Forrester conducted a survey of Millennial shoppers and 62% responded that they prefere to shop at a physical space rather than online. A few reasons for choosing the traditional method are related to security concerns, delivery fees and by the trust of people on real people rather than on reviews. Said that, it is important to say that a mix of online and on-site options are vital for a company to be competitive. Having a showroom is essential for the customers to interact with the brand and represent a big part of the sales. According to Angela Ahrendts, Apple retail chief, said she believes McKinsey consulting forecasts that 75 percent of business will actually be conducted in physical stores five years from now, even though 75 percent of people will shop online.
The main issue for having a physical store is the same it has always been: it is expensive! So it is time for businesses to start modernising the way they work and think of better alternatives. Shared economy has been saving lots of money for businesses lately and the same can be seen with the raise of pop-up stores, as they allow a brand to have a [temporary] physical space without the need for the company to set up long term contracts. The key now is to identify how many physical spaces are necessary for your business, the best strategic locations and how to make the most of the limited time you have to attract people.