Will online shopping be the death of physical retail?

Is this the future of retail?

Is this the future of shopping?

‘Ask an Expert’ is an opportunity for you to have your questions about working, learning and living spaces answered by our panel of experts.

This week’s expert is David Grant, Strategy Director of Place Associates a property consultancy that creates strategies for activating retail, commercial, hospitality and mixed-use places.  David gives us his 3 key plans for managing the impact of online shopping on ‘bricks and mortar’ retail.

If you have a question related to the business of design email info@futurespace.com.au and we’ll do our best to provide a response.  And of course all personal details shall remain confidential.

Dear Expert,

I am a marketing manager based at a retail centre in an outer suburban area of Sydney, 48,000 GLA in size.  I’m concerned about the future impact of online retail and wondered what steps we could take to ensure that our customers are not distracted by the lure of buying from home and not visiting the centre.

From Enquiring Mind, Sydney

Dear Enquiring Mind,

Thank you for your question – it is certainly a relevant concern for most owners and operators of retail centres at this point in time. In response there are a few key practices which could help alleviate the impact of online retailing to your centre.

Before I outline those three steps, it is worth noting that online retailing should not be viewed as an enemy of physical retail. There are many improvements to the retailing process which have been introduced by online only retailers. Many of these previously’ online only’ retailers are establishing a physical retail presence (Peter Alexander is one that comes to mind). In turn, physical retailers are learning from the online retailers by improving their online offer. In itself online retailing should be seen as an opportunity, rather than a direct threat.

Further to this the rates of ‘showrooming‘ (where a customer consciously price-matches in physical environments only to head online to purchase) are extremely low – in the region of 1-3% depending on the retail category. The remaining 97-99% of the population continues to appreciate the service and experience offered by physical retailers and is willing to pay a premium for the right offer or product delivered in a personalised way.

Now that you are viewing online as an opportunity, there are three principles which should help you distinguish the value of the physical experience in the eyes of your customers.

  1. capitalise on the unique advantages of physical retail over online – dial up the service and personal customisations such as knowledgeable advice. Ensure this is delivered in real-time, by providing excellent service personnel who are on hand to answer queries as they occur.
  2. Try to enhance the customer’s perception of value, by offering added services and access to amenities. Free valet parking over Christmas, fashion styling sessions, school holiday activity programs, or superior play areas all widen the customer’s perception of what is included under the ticket price of a good or service. This will negate the direct price comparisons in the minds of your customers and allow your retailers to command a price premium.
  3. Learn from the online world and apply some of their thinking to the physical environment. Services such as click-and-collect, provide a great opportunity for physical retail to emulate the speed of ordering and pick up previously only found online. The integration of these digital services will cater to a large proportion of your customers who are either time-poor or prefer researching purchases through the digital medium.

I hope this answers your question and reassures you that the physical retail experience is here to stay.

For more information about what attracts customers to retail destinations, click Place Associates Customer Attraction Score CAS Research

To contact David to discuss further click here



Categories: Ask An Expert

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3 replies

  1. No ! But it sure will change it (and of course it already has).

  2. Reblogged this on KOTHEA and commented:
    Some interesting future-thoughts on bricks and mortar vs clicks and oughta.

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