20
Jul
2016
2
Retail Store Thoughts from George Troy Author

The #1 Reason Brick-and-Mortar Stores Will Never Go Away

Sports Authority is in liquidation. PacSun contemplates bankruptcy. JCPenney’s first-quarter sales are off, and their share price drops 12 percent. Target is off target, Macy’s is in trouble, and The Gap, Inc., is closing 75 stores plus all the Old Navy stores in Japan.

It’s the end of brick-and-mortar stores as we know them. The ecommerce channel has finally prevailed. It’s over for traditional walk in stores, whether they’re on Fifth Avenue in New York or in a suburban mall.

Except that it’s not and never will be.

At the same time as all that bad news is reported, TJX (parent company of T.J. Maxx, Marshalls, HomeGoods, and others), Walmart, Urban Outfitters, and Home Depot posted serious gains and beat all expectations. And Amazon is opening physical bookstores!

It would be hard to figure out the balance between good news—retail successes—and bad news—failed businesses. But I don’t think it really matters. At any point in time, especially in the first half of the year, many stores are on the way up and many are on their way down for a whole lot of different reasons.

Every time there are bad earnings reports or a chain closes stores in their fleet, people predict the demise of traditional brick-and-mortar stores. This has been going on seemingly forever. Back in the early seventies, when Internet businesses got started, lots of industry execs were certain that it was the end of traditional retailing as we know it . . . the same predictions have been made during the six or seven major economic cycles since then.

This Is Not New News.

Believe it or not, the same thing predictions were made when Sears, Roebuck & Co. came out with their very first catalog! Why would anyone bother to go to a physical store when you could purchase anything you want through the catalog and have it delivered right to your door? That was in 1888!

People Just Want to Be with Other People

I’ll tell you why these predictions were all wrong and will continue to be wrong. A big part of it has to do with the very basic need we all have for community. Shopping and buying something from a store is so much more than simply acquiring a commodity. It’s about connections, conversations, interactions, and more yet. True, you don’t need to develop a relationship to buy laundry detergent. But actually, it doesn’t hurt either.

Here is an illustration: Many Armani clothing stores include an espresso bar. You can hang out with a cappuccino while shopping. Do Armani customers “hang out” like surfer dudes? I don’t know, but the point is that it’s part of the experience, the community that can’t be duplicated with online shopping.

And it’s not just the people, community, and the physical environment of a store that keeps people coming back. It’s the total experience—even the smells—you find in a physical store. Take a horse-tack store selling leather goods. Riding boots by Ariat, saddles, and wool blankets smell wonderfully rich. Walk into a Godiva store, and the aroma is intoxicating. There used to be a chocolate store that actually put different flavored chocolates in the store circulation system each day. The days they circulated raspberry, they sold more raspberry cremes. The days it was coconut chocolate, they sold more chocolate coconut chews. You can’t duplicate that sensory experience through online shopping.

Omnichannel retailing means finding the right balance of all the possible channels for a particular brand. Physical stores, ecommerce, print catalogues, and mobile all strive to create and contribute to a community built on a relationship between the brand or store and the people who shop there.

Woolworths, Circuit City, Blockbuster Video, and dozens of other retailers have disappeared. More fatalities are doubtless in the future. But there will always be a place for brick-and-mortar stores because they provide very real, physical opportunities for people to connect, build community, and develop a relationship.

What stores do you return to again and again for just that experience?

 

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4 Responses

  1. Great points George! Creating “real, physical opportunities for people to connect, build community, and develop a relationship” combined with the inherent difficulties in satisfying that via e-commerce are the reasons store assortments will never be erased from this earth. The challenge of staying successful in this and the other 4 laws also helps explain why no retailer builds a permanent most around their business. It explains too why despite the constant churn among retail’s constituents, the industry’s share of the US economy has remained virtually motionless over the last several decades.

    1. George

      Bruce, You are right on all scores. Generating sales volume and profit is really just a
      bi-product of the community and doing everything right. Thanks for your comments. Keep in touch.

  2. Shelley Nandkeolyar

    I enjoyed reading the article — I think it highlighted one key point for me — that there will always be winners and losers in every category and that we will continue to evolve the shopping experience to keep it current with the needs of the spenders of the day!

    1. George

      Shelley, Thanks for the comment. I couldn’t agree more. It is a very dynamic activity
      and the challenge is to figure out who the winners and loosers are going to be before
      its evident.

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