For A Convenient Shopping Experience, Physical And Digital Retail Band Together

The modern consumer is faced with a challenge.

E-commerce has made it more convenient to purchase goods quickly without travelling to a physical store. But many shoppers want the option to test out items, try them on and see if they work before making a purchase, while also avoiding costs of delivery and returns.

Feeling the pressure to meet the changing needs of consumers, brands are evolving their business models to attract shoppers by offering convenience and flexibility. This means investing in more areas of the business than just the online channel.

While historically, there have been concerns that e-commerce would reduce the need for physical retail space, more brands are realising that they need to leverage both mediums. According to a report from Savills, the consumers who shop online and the consumers who shop in physical stores often overlap. The study found that 39% of shopping centre visitors frequently shop online. Frequent online shoppers spend 19% more in physical stores than infrequent online shoppers.

“Retailers are realising that their store portfolios are of real benefit even in an online world, whether for customer experience, service and engagement or as an integral part of the supply chain,” said Savills Retail and Leisure Research Director Tom Whittington, who authored the report. “For example, many consumers want to have the convenience of ordering online, but collect those goods where and when it suits them. There is a lot of evidence that shows when people come into stores, they spend more.”

In community shopping centres, click-and-collect shoppers spend 30% more than those who are not using click-and-collect for their purchase. Click-and-collect also accounts for 10.5% of e-commerce sales, a number that will grow steadily over the next three to four years, Whittington said.

Brands are also seeing physical and digital retail work together through the returns process. Consumers can order a product or piece of clothing online and try it out at home, but return it to a physical store. This is often more convenient and affordable than sending it back by post, Whittington said. But it also comes with challenges for brands and retailers. 

“For the consumer, having this option is a positive thing, but it does create challenges around stock management for retailers. If shoppers return a product to a store, where should the retailer send it back to? Should they repackage and resell it in-store? Does it now require a discount? Slotting unwanted goods back into the supply chain is both complicated and costly and there may be little profit made when the item finally gets sold. But the consumer is king, so ultimately retailers will have to find a way to do what is demanded of them,” Whittington said.

Many consumers are also relying on a combination of physical and digital retail through the process of showrooming. Shoppers can visit a physical store to look at a product and then order it online. This is a particularly useful tactic for the purchase of large furniture, like sofas or tables, which are often too large to carry home. But it has also become increasingly popular for many other product types. Today, 17% of online sales originate from this showroom concept. 

“If you go to a large shopping mall or city centre on a clothing mission, you may spend several hours browsing and trying things on before you make your choice and then a purchase,” Whittington said. “In the past you would have to go back to buy the things you want, but now it is far more convenient to be able to order items online later, in your own time and at your leisure.”

With these changes taking form, retailers will continue to make adjustments over the next few years. 

“Some retailers are going to want to take more space for larger stores so that they can have more backspace to manage the stock for click-and-collect. Other retailers are going to take less space, because with showrooming they will only need one item in each size and colour that people can look and try on but then order online,” Whittington said. 

There is no one-size fits-all approach to providing flexibility and convenience for consumers. For many retailers, implementing new processes depends on specific customer needs. 

“It’s all about providing the highest level of convenience to the most customers,” Whittington said. “This may mean investing in e-commerce, or maybe it means more focus on size and location. It is important to remember that while online retail complements physical retail for many brands, there are others still operating very successfully from a purely bricks-and-mortar offer. Particularly in local or community shopping locations, which centre on convenience, value and service, an online offer has to date been far less critical for retailers. It’s a matter of creating and maintaining a successful retail business that can provide products where people want them, when they want them.”

This feature was produced in collaboration between Bisnow Branded Content and Savills. Bisnow news staff was not involved in the production of this content.