Are bricks and mortar stores really dying?

* 5 min read
Retail is constantly evolving. In recent years, we’ve seen a seismic shift in store formats as retailers continue to be aligned to changing consumer needs and habits. Whilst this is driven partly by the growth of online shopping, smaller shops, increased frequency and a lack of brand loyalty are all driving challenging conditions for the conventional retail formats.

While some shoppers hardly set foot in a bricks and mortar store these days, a majority percentage still prefer the experience of a physical store, and many see the ability to be able to swap between online and in-store channels as the most effective way to make choices.

Amazon made their first online sale back in 1995, so you’d imagine purely online would be their focus for growth. In fact, Amazon are focusing more on consumer experience, supported by technical innovation, to continue to build their brand across multiple channels. And their recent acquisition of Whole Foods in the US has sparked debate about their plans to expand into physical retail space. In fact, supermarkets are already feeling the effects. On Amazon’s first day of full ownership, it cut prices at Whole Foods by as much as 43 per cent on some items in its US stores, knocking the share prices of US rivals Costco and Kroger.

Prices fell in UK supermarkets too, with retail analysts predicting the ripples could grow into much bigger waves in the coming months.

The Telegraph reported: “The price cuts could hasten moves by UK supermarkets to pursue deals that will give them greater scale or new revenue streams. Sainsbury’s won a battle last year to snap up Argos owner Home Retail Group, which gave it a greater presence in consumer electricals, and is in discussions to buy Nisa, the member-owned wholesaler and convenience chain. Its rival Tesco is also trying to buy wholesaler Booker.

“These moves by the UK grocers could be doubly important given Amazon said it would also introduce Whole Foods’ own-brands to its Amazon Fresh, Prime Pantry and Prime Now offers across 302 postcodes in London and South East, extending Amazon's grocery offering. Amazon already has a wholesale agreement with Morrisons to sell fresh food in the UK, but rolling out Whole Foods’ produce, which is known for its organic and artisanal products, could attract more affluent customers to its £79-a-year Prime subscription service.”

Amazon is also experimenting with format to complement its acquisition strategy. Over the last year, they’ve been trialing pop-up book stores and have now progressed to cash-less, checkout-less convenience. Amazon Go is the online retailer’s prototype no queue, no checkout store; currently just open to Amazon employees in Seattle for beta testing, but a real opportunity to use machine learning to learn from, then play to, the cosmopolitan shopper’s demand for no-fuss convenience.

amazon go stock 1.0 min

The test store is just 1,800 square feet, sells freshly prepared food made in store and everyday essentials, to cater to the day to day shopper.

You scan your mobile phone on entry, pick up the items you want and walk out; your purchases are then added to your Amazon account. Fresh food, freshly prepared, but with the convenience of an online account.

It may be that Amazon Go is the brand’s attempt to drive loyalty to its Amazon Fresh and Amazon Dash offers, delivering a more convenient way of shopping wherever you are. Or it may be an understanding of the idea that consumer behaviour is in fact the biggest disruptor, not technological developmentiv (though clearly the tech helps in Amazon’s case), and that these days, shoppers want multiple ways to shop the same brand.

The furniture trade has also seen seismic changes in the way consumers are shortlisting and editing choice through all media channels. A recent survey showed that 100 per cent of furniture consumers utilised 100 per cent of A recent survey showed that 100% of furniture consumers utilised 100% of channels available from magazines, online, TV and physical stores before they selected their final choice. The entry of pure digital players such as Made.com and Sofa.com challenged the industry norms, although both have moved into physical retail space to ensure their consumers have the ability to touch, feel and engage with the product before final selection can be made. After all, can consumers really consider finalising large-scale / high value purchases without physical engagement? We’ve recently seen fantastic use of technology to allow consumers to personalise, to view virtually in their own home and video content to support engagement. But this is still failing to convince consumers that they don’t need to “try before they buy.”

A recent survey showed that 100% of furniture consumers utilised 100% of channels available from magazines, online, TV and physical stores before they selected their final choice.

Omnichannel is undoubtedly the future, but with many brands trying to clumsily merge their existing channels, as opposed to resetting and creating a true omnichannel experience, brands and retailers are feeling challenged to look at their brand experience across multiple platforms, as one journey, through the eyes of their consumers. According to Retail Week Connect Retail 2017 reportv, only 18 per cent of retailers say they have a single view of their customer and stock, the point defined as ‘omnichannel nirvana’. And a third say they’re still several years away from getting there. So, it’s clear technological developments and artificial intelligence can’t do it all – retailers need to think differently to keep up with what consumers are demanding, viewing their offer as one seamless brand journey.