The Future Of Retail Will Be Great For Consumers — And Retailers As Well

Is technology killing the traditional brick-and-mortar business? Nope. Here’s why.

Retail sales slipped 0.3 percent last month, as stats released last week by the US Commerce Dept. show the weakest results for businesses selling everything from cars to food since February. In addition, May’s retail sales were revised downward to show an anemic rise of 1 percent, instead of the previously reported 1.2 percent hike.

While the reasons behind those numbers largely reflect broader economic trends, Richard Hui, CEO of  WarrantyLife, a company that helps consumers track down product guarantees, picked a good week to argue that technology is not only disrupting the traditional in-store sales model, but is also making things worse for consumers and regional/local businesses.

store closingRetail’s Physical Burdens?

“Many of today’s vendors will cease to exist as online shopping takes larger shares of all sorts of markets,” Hui writes in a contributed piece on Techcrunch, pointing to the deep struggles experienced by the likes of Best Buy, Staples, Radio Shack, and Sears as evidence of a wave that will wash over major retail. (We’ve also recently highlighted the planned store closings by The Gap and Crate & Barrel.) At the end of the day, only Walmart and Amazon — which have faced off indirectly over the latter’s #PrimeDay e-commerce bonanza — will remain standing, Hui says.

“Burdened by physical infrastructure, many of today’s in-store retailers can’t escape the online gravitational pull that eats at their business despite their investments to adapt,” Hui says.

omnichannel shopperOmnichannel Balance

Hui’s argument points to a concern for this shift in power from consumers and stores to original equipment manufacturers (OEMs) as branded product makers like Apple and Samsung increasingly dictate pricing and the terms of how their wares are sold. It’s an excellent point, particularly as it could impact the prices consumers ultimately face, however we’ve tended to find that technology puts consumers more in control by increasing their ability to comparison shop online and offline.

And for the most part, large brick-and-mortar retailers like GameStop have responded sharply to consumers’ “showrooming,” by using technology from geofencing to beacons to help shoppers find what they want at the price they want. Other retailers like Target, have embraced omnichannel strategies to “enhance the shopping experience” and connect online usage to in-store purchases that reflect consumers desire for both interactive convenience and a tactile showcase. Such measures offer the immediacy of product discovery and the satisfaction picking up an item at a nearby location.

For stores to stay relevant to their local consumers, they need more technology, not less to cut through wrongheaded policies that pit a retailer’s online and offline channels against each other, a situation that customer relationship management platform Salesforce has helped client Room & Board address.

showroomingTraditional Retail By The Numbers

In a comment on Hui’s piece, Mike Boland, chief analyst and VP of content at local market researcher BIA/Kelsey, notes that the US Census places 93 percent of consumer purchases at physical retail places, retail is still predominantly offline. “’Sky-is-falling punditry’ always seems to forget that,” Boland adds.

If anything, consumers themselves demand more technology, not less from the stores they shop in. As an Accenture Retail survey of 750 U.S. consumers earlier this year pointed out, to win consumer loyalty and achieve growth across all channels, retailers must enhance their mobile commerce offerings if they are to improve the in-store shopping experience.

Only 42 percent of in-store shoppers found it easy to complete a purchase using a mobile device, Accenture found. And when asked which aspect of the shopping experience is most in need of an upgrade, 39 percent ranked the physical store first. On top of that, nearly 40 percent said that they would take advantage of the opportunity to earn loyalty points and save money on their purchases through in-store mobile phone offers.

Grasshopper, a call-forwarding service for small businesses, offered a basic overview of how well local retail actually is doing:

  • The number of small businesses stands at 23 million in the US, an increase of 49 percent since 1982, according to the Small Business Administration.
  • 54 percent of U.S. sales happen at small businesses.
  • American Express’sSmall Business Saturday” has more than 3.4 million Facebook fans, growing by 100,000 since 2013. It is likely that $5.9 billion was spent on Small Business Saturday in 2014, as there was a YoY increase of $200 million over the two previous years.

data mineUltimately, the ball is in retailers’ court. The businesses who delay closing the loop around online-to-offline channels, who fail to incorporate technology that allows shoppers to discover them and pay with mobile apps in a frictionless process, and who do not offer loyalty, coupons, and rewards in-store, will lose. The ones who provide a seamless bridge between customers’ online and offline experiences will win.

Even Hui himself seems to endorse this view.

“Retailers need to look at taking better advantage of their local infrastructure and partnering within their core area,” he writes. “Thought should be put into the question of how can retailers, with local presence and distribution, work with the new way?”

The bottom line is this: if retailers provide the same intelligence and personalized services that consumers have come to expect with online shopping, alongside proximity and a certain “human touch” that has always drawn people to one store over another, that will yield equal benefits to marketers and shoppers. If not, Hui’s warnings could come true.

About The Author
David Kaplan David Kaplan @davidakaplan

A New York City-based journalist for over 20 years, David Kaplan is managing editor of A former editor and reporter at AdExchanger, paidContent, Adweek and MediaPost.