In these exciting days of technological proliferation, many businesses have taken the multiple retail channel route: they have integrated online sales into their brick-and-mortar operations. Online retail channels include regular online sales through desktop- or laptop-optimised websites, as well as mobile sales and mobile app sales. A prime example of a brick-and-mortar store that has embraced omnichannel retail is IKEA. Not only does IKEA have 351 physical stores in 46 countries (as of December 2014), but they have a website, a mobile site, and a mobile app through which customers can browse, purchase and return items. Undoubtedly, turning omnichannel has broadened their already global reach, making shopping a convenient and pleasant experience for all, regardless of their preferred mode of shopping.
But what about businesses that have a rich online presence but do not have a physical store? Are there any benefits of opening a store? Can it boost profits? These are questions worth considering if you operate an online business, and are flirting with the idea of going brick-and-mortar.
The Benefits of Opening a Brick-and-Mortar Store
Even though industry analysts question the effectiveness of high street retail to boost company profits (due to the tendency towards the online omnichannel approach), there is still plenty of merit in opening up a physical store. According to a Tech Crunch survey, 78% of consumers still prefer to shop in-store, and claim to spend 6 times more in-store than online. This is definitely saying something!
Here are a few more reasons why you should consider opening up a physical store:
People like to see and hold what they are considering purchasing. Some people like the smell of books, and prefer to leisurely browse the aisles of a book store and take their time rather than searching online. Maybe they don’t know which book they want, and want to see what jumps out at them – this is way harder to do online. Also, it goes without saying that when shopping for clothes, most people like to try on an outfit to make sure it fits and looks good before spending their money.
Under this umbrella is the growing trend of innovative and interactive technology. Canada’s Unique Solutions Design Ltd. has created the Me-Ality body-scanning stations, which are popping up in retail clothing outlets in Canada and the US. Customers who are constantly frustrated by the lack of consistent sizing across different stores can have their body scanned, and receive a unique barcode containing their measurements and a customised shopping guide. It is just a matter of time before these start appearing in stores and malls around the world. Again, this is something you will not be able to find online… yet.
Social interaction, relationship-building and personalised customer service
Humans are social creatures, and we like to interact with other people and build relationships. Although it is not impossible to build strong and lasting brand relationships with customers if you only have an online retail business (such as Etsy), nothing compares to seeing a smiling face of an employee when you are a customer. Going into a store and being greeted and waited on by an actual human can be a positive experience that can determine whether you will transition from one-time customer to returning customer.
Furthermore, a brand can provide immediate and personalised customer service in-store. Online businesses can provide terrific customer support, but again, nothing beats the immediacy of service in a physical store.
Improved logistics and lower shipping/storage costs
Some merchants are opening physical stores that are also being operated as warehouses and shipping centres for their products. One of the biggest online stores, Amazon, is doing just that. They will be located in New York City, in the same neighbourhood as Macy’s, across from the Empire State Building, and will be using their new physical store as a mini-warehouse with a small inventory for same day shipping within the city. This store will also make returns and pick-ups so much easier for local Amazon shoppers in and around the Big Apple. Other online businesses can expect some or all of the same benefits by opening up brick-and-mortar stores. Rather than returning a product via the post office, customers can go right to the physical location of their favourite webstore, and return or exchange a product easily and without the long waits.
Something to Keep in Mind
Although the thought of opening a physical store for all of the aforementioned benefits sounds exciting, you still have to keep in mind that although you may be able to increase your market share by reaching a broader customer base through the omnichannel approach, your profits can decrease due to promotional expenditures and operational and administrative costs associated with a physical store. However, with more intensive distribution of your products thanks to opening a new channel, you might see the opposite happening. If you are willing to take the risk, you may some glorious returns.
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