“Bricks and mortar are dead in retail, e-commerce is the way forward”.
“Bricks and mortar are dead in retail, e-commerce is the way forward”. Sound familiar? Whilst it’s true that the percentage of total retail sales in e-commerce is growing, the majority of retail sales in the UK still go through bricks and mortar stores. For a number of retailers the jump to e-commerce is not currently feasible for many reasons, however, these companies often adapt their online and digital presence to remain competitive. Here I will outline three approaches that retailers can use to engage their customers online and drive profits in store, when going all out on e-commerce does not fit the business model.
1. Reward schemes
One of the most effective methods retailers use to drive sales is through reward schemes. These schemes are nothing new, with many online retailers having used them successfully for years, but more recently retailers without an e-commerce platform have been able to take advantage of them. A good example of this is Lidl, who this summer launched their Lidl Plus rewards app, rewarding shoppers with discounts based on their monthly spend. Lidl, who have the sixth largest share in the grocery market, recently announced they had turned their focus towards their bricks and mortar stores, stating they couldn’t find an e-commerce model that would allow them to remain one of the cheapest retailers supermarkets. However, using this method Lidl have shown they can utilise their digital channels to drive customers in store and improve their shopping experience.
2. Advertising online for instore products
Another method that successful store-based retailers use is to advertise their product selection on their website and social media, but to only sell the products in store. Primark are an excellent example of how using digital marketing and their online presence can make for a successful brick and mortar based business. Between May and July this year, Primark had the highest purchaser share of in-store retail, and were in the top 10 for purchaser share across all channels. Discount fashion brands like Primark can thrive thanks to shoppers browsing in store and maximising the purchases they are making, however, even with cross-selling functionality, this is difficult to replicate online. Regardless, Primark are showing that they use their online platform effectively to continue to compete in the clothing market.
Focusing on a bricks and mortar model is not limited to discount retailers, on the contrary, many of the UK’s most luxury retailers look to attract customers into their stores to sell them their customer experience as well as their products. Retailers such as Tiffany & Co still offer customers the flexibility to make online purchases online, however, to truly get the Tiffany experience, customers have the option to book appointments with their in-store team, to receive a personalised shopping experience and to take full advantage of the in-store staff’s expertise. In this way, retailers can use their online presence to give customers a range of options to meet their buying needs.
3. Hybrid approaches
A third option for retailers is to use a hybrid approach to e-commerce, in which some items are available online and others are only available in store. Aldi have used this method effectively over the past four years, selling a number of their non-perishable products online, such as wine, spirits, clothing and DIY products. Offering this service for some products, but not others, reduces the operational costs associated with e-commerce (particularly with selling groceries online) whilst still driving revenue. This method can be used alongside promoting in-store deals, enabling businesses to reach more customers and to drive new and existing consumers into stores.
The high operational costs associated with selling online often mean that it is not always feasible for retailers to have a fully fledged e-commerce arm, particularly for discount retailers. However, businesses do not have to go all in if that does not suit their business needs. There is a place online for every retailer to make their business successful, whether it's through e-commerce, attracting customers to the stores with rewards or through promoting their in-store customer experience. Having a strong online and digital presence is vital for bricks and mortar-focused stores, and they can tailor the investment they make in digital channels using one of or a combination of the approaches outlined.
To what degree retailers reach into e-commerce will be informed by a number of factors, but the customer should always remain at the heart of all business decisions. With a second UK lockdown in place, there has been an outcry for Primark to expand its e-commerce arm to offer an online store. It will be interesting to see how the retailer moves forward, balancing customer demand against the current successful business model and operational costs involved with introducing an online store.