Stores still key to omnichannel success
Retail isn’t dead, but it needs a revival, according to Steve Laughlin, Vice President & General Manager - Global Consumer Industry, IBM.
In a LinkedIn post, he notes that smaller niche brands, disruptors powered by social media, and pureplays are snapping up customers from established companies and the impact on bricks and mortar retail is widespread. Nonetheless, stores still matter. “Recent data from the US Census Bureau still shows that less than 10% of all retail transactions happen online. So in the future, stores will play a new role to differentiate a brand and many retailers have lots of work to do on cultivating a good experience for shoppers in their stores if they are going to thrive even more,” he says.
He adds that the industry is experiencing a transformation as foundational as the birth of the big box store or discount shopping nearly 50 years ago. “As credit rating and analysis firm Morningstar Credit Ratings recently found, there’s an overabundance of American retail space. The United States has 23.5 square feet of retail space for every person, the highest ratio in the world. Well behind it are Canada, with 16.4 square feet per person and Australia, with 11.1 square feet. And while the US is oversaturated, physical space is still quite valuable for a brand to create new experiences, new means of engagement, and most importantly, customer loyalty.”
There is reason to remain optimistic about the role that stores will play in the future. Generation Z is the first digitally native generation, meaning they have never known a world without constant connectivity and digital devices. While most would assume they want to shop primarily online, a study released by IBM and National Retail Federation last year found that the majority prefer to do so in stores.
“This generation wants new ways to touch, feel, and experience products before they buy them, physical experiences only accomplished in a store,” says Laughlin. “With the global Gen Z population set to reach 2.6 billion by 2020, retailers need to create more interactive engagement in their stores to serve the “always on,” mobile-focused, high-spending demographic. We need to bring digital technology into the store to truly transform the customer's experience. Stores still matter, but we must work to make them matter more.”