Growth Customer Experience Productivity Business IQ Trends Success Stories Tech Solutions Subscribe Tech Enquiry
Customer Experience

e-Commerce is alive and well... And living in a shop

Michael Baker
Smarter Writer

Michael Baker is a retail consultant and vice-chair of the ICSC's Asia-Pacific Research Council

Michael Baker
Smarter Writer

Michael Baker is a retail consultant and vice-chair of the ICSC's Asia-Pacific Research Council

It’s a mixed up muddled up world as online retailers open stores. Find out what this trend means for you.

cartoon laptop shop

It’s a mixed up muddled up world as online retailers open stores. Find out what this trend means for you.

In ‘Lola’, among the most revered rock songs of the 1970s, UK band The Kinks made a memorable comment on transvestitism: "Girls will be boys and boys will be girls/It's a mixed up muddled up shook up world except for Lola".

Contemporary retailer real estate strategy − like the world depicted in The Kinks song − is now beginning to look a bit mixed up and muddled up too. The fact that traditional store-based retailers are now working furiously in the e-commerce channel is not news. But arguably one of the most important emergent trends in retail is the almost urgent drive by online retailers to get joined at the hip with physical real estate − including opening actual physical stores.

Shoes of Prey, a Sydney-based online footwear retailer, is a local example of this trend. It started out as a pure e-commerce player, then opened a shop-in-shop at the David Jones Sydney CBD flagship, and is now mooted to be opening a stand-alone store in Bondi Junction.

It is following the lead of a number of high-profile e-commerce retailers overseas who found that the elegant simplicity and lower cost structure of a pure online operation was no longer geared to either operational efficiency or the way consumers want to shop.

One of the most important emergent trends in retail is the almost urgent drive by online retailers to get joined at the hip with physical real estate − including opening actual physical stores.

- Michael Baker, Retail Analyst    

E-commerce Moving into Bricks-and-Mortar

Online retailers leading the store opening trend include eyewear retailer Warby Parker, jewellery retailer BaubleBar, designer brand rental pioneer Rent the Runway, and men’s clothier Bonobos.

This would appear to put paid to the thesis that once virtual reality technology became sufficiently sophisticated, consumers would never need to touch, feel and try on anymore – they would have complete confidence in the online channel. That theory is beginning to look hollow. Frequently, people do want to experience the touch of products before buying them, whether it is a pair of shoes or a mobile phone.

Humans Crave Human Interaction

For the retailers, it offers something more than just an opportunity to satisfy the touch-feel-try-on factor: it gives them an opportunity to let consumers experience and interact with their products in a way that enhances the brand, thus leading to sales growth online. Apple understands that principle very well. Others are picking up on it. When Harry’s, an online retailer of upscale shaving products, opened a store in New York’s trendy SoHo neighbourhood, it wasn’t just a physical space selling shaving products but rather an actual barber shop.

Aside from its experiential value, physical real estate represents a triumph for customer convenience. It’s a place for customers to pick-up online orders if they don’t want them shipped to home or if they are in too much of a hurry to wait, and it’s also a place to return things ordered online if they turn out not to fit – or work.

Retailers Need to Innovate

Traditional retailers, many with extensive store fleets, have found themselves at a significant advantage over e-commerce retailers in this regard, just as e-commerce players have held an advantage in technology. Now, both sides are scrambling to make up their respective deficiencies.

Apart from consumers and the e-commerce retailers themselves, a major beneficiary of the trend toward e-commerce retailers opening stores will be store designers themselves. It is they who will employ their creative smarts to send consumers the in-store experience and brand message the online retailers want to convey.

For shopping centre operators and other commercial landlords it’s a hit too. Two years ago, there was panic amidships as landlords saw online retail as a windfall loss to store-based retailing, possibly even a long-term threat to the viability of many retail properties. That fear has now evaporated and been replaced with some of the old strut, as online retailers open pop-ups, shop-in-shops and freestanding stores, and launch partnerships with real estate-based businesses.

Landlords Don't Have the Sway they Once Had

To some extent, landlords need to temper their enthusiasm though. E-commerce retailers are highly unlikely to open enough stores to compensate for the ones that would have opened if we never had e-commerce at all. Deep down, landlords know that. But even so it is definitely a moment to emphasise the positive – in this mixed up muddled up world, there’s something for everyone.

Traditional retailers have a distinct advantage with physical real estate – brand exposure, place to touch and feel, place to ship and take returns. Online retailers have fought back in a hotch-potch of ways, which initially consisted of partnering with land-based entities.

Solution to misplacing assets: Tagging with tech
Tech Solutions
Tech Solutions
Solution to misplacing assets: Tagging with tech

Looking for a way to secure the tools of your trade? From tools on a work site to the electronic devices across your business, new tagging technology offers you simple, quick a...

How-to: Prepare your business for E-commerce sales holidays
Customer Experience
Customer Experience
How-to: Prepare your business for E-commerce sales holidays

Customers love online bargains – no surprises there. But in recent years, digital sales events such as local efforts Click Frenzy in May and the U.S’s Black Friday have had a r...

Flexibility in practice: tips and insights from our Telstra Business Women’s Awards winners
Success Stories
Success Stories
Flexibility in practice: tips and insights from our Telstra Business Women’s Awards winners

Is the traditional work week redundant? For a growing number of small-to-medium businesses, the days clocking on at 9am and clocking off at 5:01pm are already gone. As are visi...

Image shows cards on a table depicting business growth in an office environment.
Growth
Growth
Scale your business without the growing pains

Growing from small to medium in business can be more complex, difficult and confusing than when you first got established. So where do you devote your energy? As any entrepre...