Brick-and-mortar retailers with an online presence are outperforming ecommerce retailers. According to research from CBRE, the impacts of ecommerce sales are “vastly overrated.” The report shoes that 90% of retail sales occur in physical stores, and when it comes to ecommerce sales, 50% are from brick-and-mortar brands. Ecommerce sales today account for only 9% of total sales, and in the next five years, ecommerce sales won't count for more than 15% of overall sales. To find out more, we sat down with Jeff Moore, senior managing director at CBRE, for an exclusive interview to discuss the success of omni-channel retailers in the market.
GlobeSt.com: Why are omni-channel platforms so successful?
Jeff Moore: Consumers are increasingly demanding omni-channel functionality, which provides the ability to shop online across multiple platforms and retailers, or to browse for a particular item first, then try it on in the store and then ultimately complete the purchase online. This multi- or omni-channel approach to shopping is becoming much more popular. Both “brick-and-mortar” retailers and “e-tailers” are realizing that they need to provide consumers with options across both channels in order to grow revenue. For online players, for example, “brick-and-mortar” locations provide a way to reach a wider consumer base and limit the cost of online returns as consumers can return in-store. At brick-and-mortar locations, retailers also have the ability to “upsell,” which can result in a higher transaction spend than online.
GlobeSt.com: What are some characteristics of a strong omni-channel platform?
Moore: In today's world, consumers demand speed and convenience. Expectations have shifted in a way that makes the physical store now a choice rather than a necessity. The strongest omni-channel platforms are those that are considered easy and simple to use. Also, those that have quick and free delivery, free returns and a strong integration between the channels are proving to be very successful. That means you can order online and pick-up in-store, or place an order online from another store, if your item is not available in a specific location. Buyers want integrated channels and that in turn requires retailers to invest in technology and data.
GlobeSt.com: How do ecommerce-only companies compare to brick-and-mortar companies without a strong online presence?
Moore: E-commerce is very expensive to operate and many online companies struggle to turn profitable. Online-only players may be able to create a great brand image, but their profit margins remain limited due to the high cost of delivery and returns. Brick-and-mortar companies in turn can maintain profit margins with store-only models, but they face market share losses, if they do not provide online options. Consumers simply want both.
GlobeSt.com: Do you think that Amazon's purchase of Whole Foods fits into this trend?
Moore: We cannot comment on the Amazon purchase or Whole Foods. Generally speaking, the interplay between brick and mortar and online is going to play an increasingly important role in the grocery segment as well.
GlobeSt.com: As omni-channel retailers outperform ecommerce sites, how do you imagine the future retail landscape will look?
Moore: The future will look increasingly omni-channel. We will continue to see e-tailers opening brick-and-mortar stores and brick-and-mortar retailers will be expanding into e-commerce. The future is about a seamless integration between the two and will require advanced technologies and data analytics to get it right. The future for successful omni-channel retailers will also involve new industrial and supply-chain models that enable them to get merchandise to customers faster and cheaper. This is the key to profitable growth.
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Kelsi Maree Borland
