The Tyro Blog

13 July 2015 - 3 min read


Five reasons brick-and-mortar retail won’t die

The traditional retail shopfront has been declared dead and buried many times, since techno-centric Gen-Y and Millennials have become the most desirable shopper demographic. But is that true?

There’s no shortage of evidence that online shopping is going gangbusters. According to NAB data, online retailers increased sales by 8.2% while traditional shops gained only 5.3% in March.

Annual year-on-year online retail spending increased to $16.9 billion for the year to April 2015 or 7% of all retail sales.

And not only are we buying online, we are using our smartphones to do it. According to the latest Deloitte report, one in four of all online shopping purchases by Aussies are being done on a Smartphone as part of a M-commerce sector which is now worth $4 billion annually.

But pronouncing the humble store as dead and buried is still very much premature. The lengthy queue of online evangelists who believed that traditional shopping can be replaced with a digital product-for-payment transaction are being greeted with exceptions every day.

You only have to take note of the omnipresent Apple stores and the recent announcement from Google to open a London outlet to see that the brick-and-mortar concept will be around in some form for a while yet.

Here are five reasons why brick-and-mortar retailers won’t die:

  1. Shoppers still enjoy a professional customer service that provides personalised feedback and additional product information.
  2. No online survey or data capturing strategy is able to produce deeper consumer insights than face-to-face conversations.
  3. Even the smartest online technology is yet to replicate the sensory experience of touching, smelling and feeling the products in a multi-dimensional setting.
  4. Offering the opportunity of instant ownership remains a strong motivator for in-shop purchases.
  5. The social and emotional value of the shopping experience and human interaction in associated activities still holds value with us.

But retailers would be ill advised to believe they can just sit back and enjoy the ride. They have to have some online strategy if they are going to stay in the game.

The advantages of online:

  • Online shops are permanently open and use customer data extensively to “stay in touch” and advertise specific products.
  • An additional digital shopfront for brick-and-mortar merchants can help to open new sales channels, while loyalty apps can help to engage with customers after they left the shop.
  • Online sales account currently for about 7% of all retail sales in Australia.

In the end digital innovation and new tools can give shop owners the critical edge in the competition with online businesses. At the very least they need to include online as part of an overall strategy to win over customers.