Has the advent of online stores sparked an existential crisis for the physical store?
This question is actually triggered by the current strong buzz about the growing attractiveness of online purchasing both regionally and globally. The results of a recent survey that was conducted with 3,000 consumers from the region found 50 per cent of respondents used the internet to shop in 2013 and that 80 per cent were satisfied with their online shopping experience.
The study also showed that price, security of payment method and low or no service charge as key considerations for online shoppers. But, to what extent is this a real threat to the physical store?
Online stores come with a lot of convenience for customers. First, the price of items purchased online is less than their price at physical stores, because the latter have to pay huge rents in high-streets or malls, which don’t apply to the former.
Also, and most important, online purchasing saves time and happens around the clock; the consumer no longer has to take time to go to the store to purchase a needed item. By a simple click, he can make a transaction from their internet-enabled devices — anytime, anywhere.
This is actually a major evolution in consumer purchasing behaviour that retailers can ignore only to the risk of their business survival. However, consumers want to feel and touch the items they buy. And when they buy, they prefer to get their items immediately, something an online store cannot offer.
I have always believed that the consumer imposes the rules of the game. In our digital age, the consumer has become connected round-the-clock, reconfirming the old fact that he is the “king”.
I would go a bit further to say that the consumer is a “dictator”, in dictating to retailers the channels they should use to suit his convenience. Retailers cannot but adapt their sales channels to cope with the evolution of the consumer. From physical stores to online purchasing and then to mobile purchasing, retailers have been reacting to consumer trends and sometimes they’ve done so too late.
Multichannel strategy
When the internet came out, retailers set up their websites and in the e-commerce era some of them adopted a multichannel strategy, giving consumers options of channels to conduct their sales through.
With the mobile revolution, current consumers tend to purchase using more than one channel. For example, consumers can buy online and pick up their items from the store (click-and-brick). They might also use their mobiles in-store to research or buy products.
Just as they can buy online, customers would expect from retailers to adopt an online returns procedure. They would also expect retailers to make it possible for them to have virtual tours of their stores and maintain a product inventory online. This heterogeneous use of different channels is what is called by the industry as “omni-channel retailing”, which constitutes according to many a natural evolution of the previous multichannel concept.
It remains to see to what extent retailers are ready to meet the evolving expectations of the digital customer. An interesting study conducted last year with 1,500 multichannel shoppers and 256 decision-makers from retail and manufacturing organisations in the US, UK, France and Germany showed that 50 per cent of respondents expect to buy online and pick up their purchase in a physical store, and that 71 per cent among them expected to view in-store inventory online.
Only 36 per cent of retailers, however, could provide customers with pick up of online purchases and online visibility of the inventory. The readiness of retailers in our region might be much lower.
So, an online store or physical store? That’s not the question. Retailers will have to adapt to changing consumer behaviour and trends to keep up their competitive advantage.
Retailers can no longer opt for either an online channel or a physical channel; they need to have both because they complement customers’ convenience and retailers’ offering, which is necessary for the longevity of the business. Moreover, they need to adopt an omni-channel sales strategy to attend to the expectations of the current digital consumer.
The brick-and-click is here to stay.
C— The writer is the CEO of Emax Electronics.
