At IRCE 2016, we welcomed 13 innovative technology providers to be a part of the theater and share their perspectives and solutions with attendees. As a blog series, we will share some of the insights from the technology providers that presented at The Innovation Theater.
Today’s guest post is by Sandeep Bhanote, CEO of Radius8 on leveraging the value of physical stores. Enjoy!
Leveraging the Value of Physical Stores in the Age of Amazon
Traditional brick and mortar retail is in crisis with a record number of store closings and bankruptcy filings. Changing consumer behaviors and the explosive growth of pure play ecommerce players present the single greatest threat to brick and mortar stores, that are now left too often over-inventoried and over-staffed as in store foot traffic continues to dwindle year on year.
However, there is immense untapped potential in the store, as consumers, especially millennials, desire shopping experiences that only exist in the physical store where they can try things on and physically interact with products. This is backed by the fact that over 90% of retail transactions still happen in store. In fact, several e-commerce companies like Amazon, Bonobos and Warby Parker have opened brick and mortar locations in an effort to expand their brand appeal and provide an integrated shopping experience for their consumers.
While many of the problems facing traditional retailers can be attributed to shifting macroeconomic factors, the main challenge retailers face is that their brick and mortar store is disconnected from the digital world, where consumers spend most of their time. In today’s world, nearly every consumer can browse the world at the tip of their fingers, just a tap away from instant access to competitors offering low prices and free shipping. While some retailers have implemented solutions that aim to integrate online with their brick and mortar, existing solutions place the physical store as an afterthought in the shopper journey. Stores are effectively just fulfillment centers where customers can pick up their online orders.
Meanwhile, e-commerce pure play retailers have capitalized on the convenience that consumers demand. E-commerce sales grew 14.6% in 2015 in contrast to meager overall retail growth of 1.4%. Amazon is leading the charge in e-commerce growth. This past year, for each dollar of E-commerce growth, around $0.60 belongs to Amazon. In terms of overall retail growth, Amazon accounts for over 20% of total growth in US retail, leaving the rest of retailers fighting for an ever shrinking portion of the pie.
Instead of trying to compete directly with Amazon online, retailers should look to their brick and mortar stores as a competitive advantage. Consumers still find physical stores essential as they provide experiences that build valuable relationships between consumers and brands. This is especially relevant in the categories of clothing, footwear, and beauty.
The future of brick and mortar lies in leveraging solutions that combine the best of both physical and digital. By deploying the right technologies retailers can turn their brick and mortar into a strategic advantage, discovering new value in providing consumer experience that cannot be duplicated through online only channels.
“At Radius8, we don’t believe the store is dead; we simply believe we’re entering the next phase of retail, where consumers are demanding a more unified online-to-offline (O2O) experience. We help retailers deliver these experiences, in a way that’s smarter, more innovative, and more measurable, so that you can better serve your customers, unlock more value and be more profitable in today’s hyper competitive retail landscape.” To learn more, visit: http://www.radius8.com/
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