Commercial Property Herald: How Will Brick & Mortar Retail Survive Online Sales

This is the first in a series of posts about “online” vs. “brick & mortar” retail sales and what I consider the factors affecting both. It is my intention by this series of articles to facilitate thought, discussion and analysis in the hope of proposing helpful strategies to allow a healthy co-existence between the two methods of retail sales. As General Martin Dempsey said today on Face The Nation, brick & mortar is at a “strategic deflection point,” in which it needs to learn and adapt. The bottom line is that I do not see online sales going away anytime soon and if you deal in the brick & mortar, you better think out your strategy.

During the last week of December, I read an article declaring that 13% of all online sales on Christmas day was for the purchase of an iPhone, iPad or iPod. Steve Jobs is likely smiling away in his grave. A few days later I read another article about how much online holiday sales have increased, (I don’t recall the number but it was in the billions). These two facts have been festering in my mind for the last two weeks. What is the current economic realities of brick & mortar retail and how will brick & mortar survive the internet.

Not to overstate the obvious, there is a strong trend towards online purchasing and away from brick & mortar. I don’t think anyone sees this trend abating anytime soon. I’ve noticed this trend in my own buying habits and the buying habits of those around me. This year I have made online purchases of clothing; the type of purchases I would have never done, previously.

For example, this year I stocked up on two new business suits, a few casual slacks and shirts and a few new pair of shoes, all of which were purchased online. To be fair, I didn’t even consider the suits until after I had seen them in a brick & mortar store and I first saw the shoes in a print catalogue. I’ll let you in on a well known secret; I have a thing for men’s saddle and spectator shoes. A style not widely popular and a style that has been pretty difficult to get unless you wanted to play golf in them and were willing to walk around your home and office with spikes on. So I was pretty interested in getting a few new pair.

Sometime in September, I received a print catalogue, showing saddle shoes, manufactured by Cole Hahn, in larger sizes. While I liked what I saw, I was reluctant to purchase shoes online, sight unseen. Later, in October, my wife and I stopped by a Cole Hahn, brick & mortar, store in a mall in Phoenix. To the delight of my wife, there on display were the saddle shoes. At the urging of my wife, I tried several pair on. Although I would have liked to wear the shoes out of the store, the store did not have my size in stock and I had to order them, to b delivered to my home. The shoes arrived a week or so later. At the time that I ordered the shoes in the store, they seemed a bit narrow. However, since Cole Hahn made it brain dead easy to return, I felt comfortable ordering them.

After the shoes arrived, it was very clear that they were too narrow so I returned them and received a full credit. Although disappointed, I remembered that the same shoes were being offered by a major big man, brick & mortar retailer with a large, (no pun intended) online marketing presence. There, on their website, were the same shoes but in wider sizes. Not only that, some of the shoes were being heavily discounted. Without further ado, sitting at my desk, I ordered a few pair. Within a week, I had shoes that fit and it cost me less money. I saved money by having the shoes shipped to their local store.

Offering free shipping to their brick & mortar store was a brilliant piece of marketing on their part. The store wasn’t that far away so it was easy for me to pick up my shoes and when I was in the store, I bought three shirts, two pair of slacks and tried on two, three piece suits.

A few weeks later, I received an email newsletter indicating that the suits were being offered at a 30% discount, if purchased online by the end of November. Since I liked the suits and knew what size to order, I purchased them online, saved 30% and had them shipped to the store again, saving the shipping charge. You know where I am going with this. When I went to the store to pick up my suits, I also bought two more dress shirts and two ties, spending more money. What a surprise. Brilliant, sheer brilliance. There is no doubt in my mind that somebody with brains really thought through their strategy, coordinating their online and brick & mortar marketing. I love it when people use their head.

So what is the point of my “shoe & suit” story?

Trust. I am gaining a greater trust of online purchasing; and

Thoughtful marketing and the effective coordination of online stores with their corresponding brick & mortar stores. How to have both work in tandem and help each other out rather than cannibalizing the sales of the other.

More on these topics and the effect of online taxation on brick & mortar sales in later posts. You can leave comments in to this post on Commercial Property Herald below or comment on twitter @creradio.

5 Comments

Hilary, you are correct and you ask, probably the most important question. How do the mom & pops deal with this issue. I am afraid that I don't have a really good answer and I am looking for one. I suppose, the bottom line is to figure out how the consumer can be motivated to buy at the store rather than online. It seems that the B&M needs to provide something to the consumer that the consumer can't get online. My guess is service but that is too simple an answer and I suppose it depends upon what you are selling.

Posted by: Howard F. Kline | July 11, 2012 at 04:04 PM

What about the small retailer? This article is all about the chain stores who have a B&M store in every town and so can channel online purchases to their stores.
We, along with millions of others< have just one town store.
It really is difficult to compete with online prices.
People come to our store to 'try on' as illustrated in the article, then, once they know what fits well, order online!
I wish we could reduce our prices to compete, but with all the overheads this would be suicide for us :(

Posted by: Hilary | July 01, 2012 at 10:00 AM

I think, ultimately, my series on the survival of brick & mortar will depend upon the ability of the retail and retail real estate professionals to think their strategies through different rose colored glasses. My next post will be about how Steve Jobs thought things through for his Apple Stores.

Posted by: Howard F. Kline | January 12, 2012 at 04:39 AM