The hybrid future of retail
In the last 20 years the internet changed the practice of retailing. Online retail is increasing while offline retailers are losing customers. Last year, online sales in the Netherlands increased with 20% and offline sales decreased with 11% (Molenaar, 2013). Traditional organizations focus on developing an e-commerce strategy to create a competitive advantage over their online competitors, while online retailers like Coolblue are opening offline stores to provide better service tot their customers.
The shift from offline to online retail has important implications for the business world and other stakeholders. Firms need to adjust their sales strategy and integrate online, offline and mobile practices. Also, the decline in offline sales has major consequences for communities. Offline stores need to close because of declining sales and this results in an exodus of shopping areas. Vacancy of buildings and changing functions of neighbourhoods and provides government with a complex social problem.
However, the shift from offline to online retail also has positive consequences. Retailers need less space, because they reduce their assortment in physical stores. Therefore, offline stores become smaller and create, as some people say, a more intimate atmosphere (Molenaar, 2013). Also, we find lower rents and cheaper facilities as a result of decreasing demand. This lowers the costs for offline stores and this might result in lower product prices in offline stores. Further retailers focus on higher service levels and technological innovations to creater a better customer experience in offline stores.
One of those focus points is the stimulation of senses. For example, dim lightning, calm music and an inviting smell in the fitting rooms. Also, the virtual fitting room in clothes stores simplifies the process of fitting. This solution reflects, mirror-like, a photographic image back to the shopper showing exactly what a garment will look like on them. Further, some retailers pursue an e-commerce strategy whereby products are bought online and can be picked up in their offline store. Other retailers integrate technological tools (e.g., internettables) that give customere access to their online, more enhanced assortment. Finally, some local retailers create their own ´shopping area website´, providing an information platform where customer can find detailed information about all retailers in a local shopping area.
Although the role of offline retail is changing, I do not believe that recent technological developments will eliminate the offline function entirely. In my opinion, retail has a hybrid future, with integration of offline, online and mobile strategy.
What do you think?