The Real Lesson Brick-And-Mortar Retailers Should Learn From Amazon
A few months ago, we shared a perspective on how brick-and-mortar retailers should take a hard look at reimagining the optimal in-store user experience much as the best websites have done with their user experience. We opened that article touching on the demise of many brick-and-mortar chains, but our point of view was (and is still) that those physical stores can still play a vital role in the shopper marketing landscape if they can deliver experiences that add value beyond the pure transaction.
I was reminded of this perspective a few weeks ago when Amazon acquired Whole Foods. It was remarkable to me that, in the midst of a rash of store closings by previously iconic retail brands, the brand that has defined ecommerce for the past 10 years is now dramatically expanding its brick-and-mortar reach. Why?
There are two parts to this answer. The first is based in pure business data. Amazon knows things like brick-and-mortar stores still see higher margins, higher conversion rates and higher overall profits than ecommerce entities. They know this move will give them an even greater ability to distribute products more quickly than other retailers.
The second part, though, is that they see trends in shopper behaviors and desires. They know shoppers are shifting the way they spend their money, buying fewer tangible products and instead putting more of their precious dollars into experiential purchases.
It is this trend, perhaps more than the remaining profit numbers in physical stores, that has me convinced that brick-and-mortar stores will be critical to the future success of shopper marketing strategies. Consider other leading retailers such as Apple, IKEA, Eataly Italian markets — and the many more that sell online, yet remain popular destinations for in-person shopping.
Others agree that brick-and-mortar still matters. In fact, a recent Forbes article claims that “Stores (not ecommerce) Are the Future of Retail.” I may not go quite that far, as I believe online sales will continue to hurt store sales in many corners for the foreseeable future. However, for most brands, I do not believe the strategy of shuttering stores or shifting all focus from brick and mortar to online sales is a sound one. There are many shopper needs and experiential desires that are better addressed in a physical store than they are online.
Agencies like hfa have always maintained that the first objective in marketing (shopper or brand) is to identify your targets’ unmet needs and then orchestrate an experience and corresponding communications that help address them. Even in the future, this is the strategy successful brands will implement — just watch Amazon.