Optichannel: Winning Strategy for Post-Pandemic Retail

The prevailing view during the pandemic—that bricks-and-mortar retail was in a battle for survival against e-commerce—has given way in the post-pandemic economy to an understanding that the most successful retailers are those who optimize all of their sales channels.

“We are finally beyond the theory that e-commerce and bricks-and-mortar retail are at war with each other. In reality, they work together to make each other better,” Brandon Isner, CBRE’s Head of Retail Research for the Americas, told GlobeSt.com.

Isner is bullish about the growth potential for e-commerce: he thinks direct-to-consumer can eventually carve out close to a 30% share of overall retail sales, double what it is today. But he’s part of a growing consensus among leading retail players who see fine-tuned omnichannels feeding into each other as the future of retail.

Mark Masinter, Newmark’s Chairman of Global Retail, told us he doesn’t think direct-to-consumer will ever get to a 30% share of retail—he’s betting on “high teens to 20%.” He agrees that the pandemic-era notion that bricks-and-mortar and e-commerce were arm-wrestling for hegemony is not today’s reality.

“If you’re going to succeed in the retail business, you must be great at both [bricks-and-mortar and e-commerce],” Masinter told GlobeSt.com. “If one works well and not the other, you’re going to lose customers.”

According to Nicole Larson, Manager, National Retail Research, Colliers, the future of retail is what Colliers is calling “optichannel.”

“The retail industry’s future will involve a mix of online and in-person shopping. We expect retailers to focus on the ‘optichannel’ approach versus ominchannel—optimizing all channels in play,” Larson told us.

“By combining the convenience of online shopping with the personal touch of in-store experiences, retailers can provide a more comprehensive shopping experience for their customers,” she said. “It’s all about flexibility for the consumer.”

James Cook, JLL’s Head of Retail Research, agrees that the best strategy for any retail brand is a combined approach across all platforms, including online and social media marketing combined with a “reasonable” bricks-and-mortar store strategy.

The combined approach is shaping retailers’ decisions about optimizing store footprints. The post-pandemic model is somewhat smaller than a big box outlet—with a significant portion of the footprint reserved for in-store fulfillment of online orders.

“It is a rare retail store today that does not do some form of click-and-collect,” Cook told us. “In the future, such a store will be even rarer.”

“Any store that does a moderate amount of pickup activity needs to have a significant amount of square footage devoted to storing, staging and pickup,” he said. “Many chains are still determining what the perfect store size will be. I expect that we won’t see stores get significantly smaller on average in the future.”

New store formats also are offering more space for a deeper merchandise assortment. “These new store formats will have brands focusing on tailoring their products and marketing strategies to specific local markets,” Larson said.

E-commerce buying patterns also are determining where retailers are putting their bricks-and-mortar stores: Abercrombie & Fitch recently closed its flagship store at Chicago’s Water Tower Place on Michigan Avenue, opting to open a smaller store in suburban Lakeview—the brand’s busiest ZIP Code for e-commerce in Illinois.

According to Masinter, which omnichannel customers use when they make their retail purchases will depend on evolving buying patterns influenced by personal dynamics shaped during the pandemic.

“Commodities are purchased online. Clothing, gifts, specialty items—when you’re having a dinner party and you need to see the produce and the proteins—that’s when you’ll go to the store,” he said.

While the pandemic temporarily made online grocery shopping a necessity, most consumers still prefer shopping for groceries in-store, Larson said.

“Consumers’ shopping habits online and offline differ when buying groceries,” she said. “Online shoppers are relatively habitual and less adventurous. They’re likelier to lean toward popular brands or those they regularly consume. Relatively few [online shoppers] seek out new products.”