In the last year, there has been numerous articles about how the growth of retail stores in malls is hindered because of the rise in e-commerce as well as the changes in consumer behavior, with the most prominent example being shops along Orchard road.
This fear is not unfounded – according to a study done by PayPal, 73% of Singaporeans have shopped online in 2016, spending an estimated 3 million Singapore dollars online, and this number is predicted to grow significantly in 2018.
That being said, while the revenue generated by brick-and-mortar stores may be on a decline, I don’t necessarily subscribe to the notion that these businesses will become obsolete.
Understanding your business model
Every business is different – From my experience, two major competitors in the same industry selling the same products or providing the same service can have very different business models. A SingTel vs. a Starhub tackle customer relations and sales very differently – SingTel places plenty of emphasis on their app, constantly trying to improve its user experience so as to drive traffic there whereas Starhub places more emphasis on creating a good in-store experience.
For a brand like Zara, opening a couple of physical stores every month in different parts of the world despite the decline in brick-and-mortar, works for them simply because their supply chain model is cost-efficient and allows them to be nimble in the incredibly fast-moving world of fashion.
Online retailers see the benefit of having a brick-and-mortar store to enhance their presence
In the past 2 years, there has been a trend where businesses (which started as e-commerce) are finding value in opening physical stores. While it may be true that shopping online gives both customers and brands more variety and cost-savings, the key to winning at both is to offer an omni-channel solution, where online focuses on user experience & sales conversions and offline promises a more personal and lifestyle touch-point.
Local e-commerce businesses such as Love Bonito, Visual Mass, Collate the Label, etc. have found value in having a physical presence as well. It has facilitated in-store product exchanges & returns, hosting of curated styling sessions, and providing an experience to their customers which leaves an impression. It has also allowed them to reach wider segments of customers, such as people who prefer to see and feel the product in person as well as people who have the purchasing power but do not feel comfortable making their purchases online.
Innovate to stay ahead
Your business can have a robust strategy but there needs to be constant re-evaluation to stay ahead and ensure you don’t get left behind. Amazon started as an e-commerce business but they recognized the importance of innovating and leveraged on Artificial Intelligence (AI) to run grocery stores. It has disrupted the whole notion of grocery shopping and despite its flaws, customers do love and appreciate novel efforts made by brands to improve their experience.
Another great example is the HERR Barbershop in Seoul, which has disrupted the men’s grooming business – they have transformed a haircut or a shave into a personalized, tailored experience. Partnerships with various retail brands to offer a variety of suits, ties, etc. and styling sessions allowed them to position the whole haircut/shaving experience as a relaxing yet stylish experience.
At the end of the day, the key is to offer a seamless shopping experience for customers – where online and offline efforts complement one another to add value to the customer experience.