Physical retail will prevail and thrive, and the substantial growth of online sales in recent years poses no threat, industry experts say. On the contrary, a sound omni-channel strategy is key to physical retailers' success.
Though pure-play e-commerce sales volume has grown by 92 percent since 2013 — about nine times the pace of physical-store sales growth for the period, according to JLL — the numbers look scarier than they actually are, according to industry players quoted by National Real Estate Investor. Brick-and-mortar sales (which JLL says hit nearly $4.4 trillion in 2017, versus $262 billion in online sales) will always vastly outstrip e-tail, experts say. Nearly 90 percent of sales are conducted in stores, says JLL.
“Brick-and-mortar will always have that stronger ratio or percentage [relative to] online sales”
E-tailers have learned that they need to have a physical presence to grow and thrive, observers say, citing ICSC’s study titled The Halo Effect: How Bricks Impact Clicks, which shows that opening a store boosts a retailer’s web traffic by some 37 percent, on average. This is why native brands Allbirds, Bonobos, Untuckit, Warby Parker and a host of others are opening stores, these experts say.
“Most people think, ‘Oh, online sales are going to take over all retail sales.’ That’s not true,” said Brandon Famous, a CBRE executive managing director, as reported by National Real Estate Investor. “What it will do is enhance brick-and-mortar retail to a significant degree.”
Though growth of online sales will continue to outpace that of physical stores in the near term, “brick-and-mortar will always have that stronger ratio or percentage [relative to] online sales,” said Famous. “Right now it’s about 85 to 15; it may get to 80-20 looking out five years. I don’t see it going past 75-25.”
“If you read a lot of the reports out there and [the] information, the perception is [that] everybody is shopping online, when in actuality brick-and-mortar retail is growing”
Only those retailers that fully embrace omni-channel retail will thrive, argues Famous. Others concur.
“If you don’t embrace the omni-channel approach, you will die,” said Greg Maloney, CEO of JLL Retail, as reported in the publication. “If you read a lot of the reports out there and [the] information, the perception is [that] everybody is shopping online, when in actuality brick-and-mortar retail is growing. Sales are growing [and] they continue to grow.”
By Edmund Mander