Brick or Click? -The State of Physical Retail in 2018
We’ve all heard it before: retail is dead – or at the very least it’s dying.
If that’s the case, we want to live as long as retail, because it doesn’t seem to be going anywhere anytime soon. Unless, of course, that means us living long enough to watch another Pitch Perfect sequel. Then please, let’s call it a day…
The point is: retail is doing fine. In fact, looking at the early 2018 numbers suggests it’s still growing: retail sales were up 4.1% year-over-year during the first two months of the year. Sure, ecommerce is doing well too – with sales up 12.8% year-over-year, but that’s actually down from the 27.4% annual increase they did last year. Growth is growth, but things are starting to even out. (Source: Strategy. Sales Growth in Canada Continues to Slow).
But all that still perpetuates the same brick vs. click narrative that has got in the way of countless retailers evolving their business and learning more about what their customers want. At the end of the day, we serve the consumer, and it’s our jobs as brick and mortar retailers to provide them with the products and experiences they want.
There’s good news on that front. Within a few years, millennials will be the largest demographic group. Scary, we know. But they’re taking over and that’s good for you. Hear us out. It’s often said millennials value experiences over things, but that’s only half true, because when they do buy things they want an experience to go along with it. It’s not just about the product – it’s about the entertainment value and experience that came with it. Buying online can’t come anywhere close to the experiences that can be provided in a physical location. Provide the product and a great experience, and they’ll love you almost as much as they love Snapchat.
On the other side of the spectrum, we’ve seen the growth of brick and mortar moving online. It’s easy to assume ecommerce is all Amazon, but that’s not the case. Brick and Mortar ecommerce sales actually make up almost half of all online sales at 43.3%. (Source: Strategy. Sales Growth in Canada Continues to Slow).
It’s evolving too. As the marketplace and its realities have changed over the past year, we’ve seen a couple distinct trends taking place in physical retail locations: and they both have to do with service. On one hand, retailers like Loblaws are experimenting with home delivery in an attempt to minimize the hassle younger shoppers associate with their stores. On the other, we’re seeing a growth in self-checkout technology in new industries. While we’re used to it in grocery stores – and growing to expect in it McDonalds (you can finally get extra pickles without the judgement!) – it’s starting to pop up in entirely different categories. While it’s largely driven by a desire to lower the overhead of wages, it’s actually providing the convenience millennials demand from a retail experience.
When looking at the 2018 landscape of physical retail in Canada, it’s clearly click and brick. That’s not going to change for a long time, and if retailers prioritize providing the right products and the right service, customers will get off their laptops and into the store – and if it looks cool enough, they just might Instagram it too. See? Click and brick.