With technological advancements facilitating consumer’s ability to shop, the emergence of e-commerce continues to gain momentum. Many experts once believed that the future of retail would lie primarily within the e-commerce marketplace as online retailers were expected to overtake traditional brick-and-mortar chains. As a younger generation of shoppers becomes the main consumer within our marketplace, will e-commerce continue to dominate?
At the end of 2014, Calvin Silva, senior retail analyst at Nasdaq Advisory Services spoke about how brick-and-mortar merchants – which have been cast as the underdog by industry pundits and media alike in recent years when compared to online merchants, most notably, Amazon – might have the competitive advantage after all (Forbes, 2014).
At first glance this statement by Silva is confusing when you look at the market share held by a company such as Amazon. Amazon was founded on July 5th, 1994, and 21 years later surpassed Walmart as the most valuable retailer in the United States by market capitalization (New York Times, 2015). As the largest internet-based retailer in the United States, Amazon’s revenue in 2014 was calculated to be $88.988 Billion.
A company like Amazon has revolutionized the way consumers behave, however, it is companies such as Amazon who will have to evolve and adhere to the behaviors of consumers if they hope to sustain long term growth. Retailers who are considered to operate solely in the e-commerce market are now experiencing challenges that favor traditional brick-and-mortar shopping.
Convenience and access to worldwide inventory is what has made online shopping attractive to consumers, nonetheless the majority of consumers still want to feel products before they purchase them. This is a challenge for pure-play e-commerce retailers as the past few years have shown that the biggest winners within the retail market have been retailers who have a productive brick-and-mortar footprints (Forbes, 2015). So how do pure-play retailers evolve to adhere to consumer demands?
The answer for both pure-play and brick-and-mortar retailers lies in operating in a middle ground. It is unlikely that the future of retail will be dominated by online shopping, rather pure-play retailers will need to explore strategic options that will give them an enhanced brick-and-mortar footprint, while brick-and-mortar retailers will need to incorporate technology to provide consumers with an enhanced experience and improved convenience.
One trend that is likely to emerge in the coming years for pure-play retailers will be establishing a presence of pick-up stores. Pick-up stores will provide consumers with the convenience of online shopping with easier accessibility to feel products. Another key feature associated with pick-up stores will be the consumer’s ability to return or exchange products without having to ship the product back to the company’s distribution center.
In order to compete with the emergence of pick-up stores, brick-and-mortar retailers will need to enrich the shopping experience for consumers. This demand will be fueled primarily by the next generation of shoppers. Brick-and-mortar retailers will need to explore technological options that will provide consumers with an enhanced and interactive shopping experience that aims at customer satisfaction.
The future of retail will look much different compared to the past that we are accustomed to. Technology will become an invaluable tool that will be used to intrigue the interests of consumers. Providing an enhanced and interactive experience for consumers will drive the evolution of the industry.
Technology will no longer become the medium of shopping, rather it will become a foundation to enhance the consumer’s shopping experience. The evolution of retail has already begun and it is only a matter of time before more retailers explore different avenues to provide consumers within a shopping experience like never witnessed before.
Posted by Alvaro Campos, Guest Blogger