| December 20, 2017
As Tim Minchin notes, “We're just (expletive) monkeys in shoes”. But collectively we monkeys buy a lot of shoes. And clothes. And other stuff. And companies have made a lot of money building brick and mortar stores that sold shoes, clothes and other stuff. Then along came e-commerce and everything changed. Or did it?
By all estimates e-commerce is booming. eMarketer estimates that retail e-commerce sales worldwide will increase at four times the rate of retail sales in 2017, taking a 10 percent share of total, and expects growth to stay in the double digits through 2021. Kantar Worldpanel estimates that grocery e-commerce is growing at 30 percent year on year with just under a 5 percent share of total sales.
But there are signs that e-commerce boom has its limits. Kantar Worldpanel reports that there are signs that e-commerce growth is slowing down in Europe. And many pure play e-commerce companies have decided that a physical presence is needed for them to grow further. As early as 2012 the men’s online retailer Bonobos began to open physical stores in order to tap the half of would-be customers who wanted to feel the clothes before buying.
And therein is the reason why retail will always be a blend of physical stores and e-commerce: the monkeys want more than just a product description and a good price. The challenge for existing retailers is to figure out which of the various motivations they can appeal to best. Here are three basic drivers that I believe will help bricks and mortar stores survive, provided they adapt the experience they offer rather than just focusing on prices.
It is not just clothes that people want to try for size. As I noted in this post it is not easy to choose a cauliflower when you cannot see and feel the actual vegetable.
Retail therapy just does not seem to be as effective when dabbing at a mobile phone screen. Part of the fun is shopping with friends and enjoying the experience as much as the purchases.
Last but by no means least, direct interaction with a knowledgeable human will likely beat the bots. Best Buy’s free in-home consultations about what products might fit a potential customer’s needs have helped the company bounce back from Amazon’s onslaught.
But what do you think? Am I too bullish on the future of bricks and mortar? And what other shopping motivations might have a role to play? Please share your thoughts.