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?

Sources:

http://shoppernewsblog.com/2012/05/24/sensory-marketing/

http://www.theguardian.com/media-network/media-network-blog/2013/aug/21/multi-sensory-retail-high-street

http://www.cormolenaar.nl/wp-content/uploads/2013/10/analyse-retail-october-2013.pdf

http://fits.me/

http://www.cormolenaar.nl/wp-content/uploads/2013/04/verandering-winkels.pdf

https://www.marketingonline.nl/bericht/het-einde-van-winkels/

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2 responses to “The hybrid future of retail”

  1. 335527rv says :

    I totally agree with you. Even though the market has changed in a big way, I believe offline retail will never disappear. Aside from the positive changes physical stores are making to attract customers, in my belief there will always be customers that prefer them to the online channel because of the social aspect of ‘going shopping’.

    Shopping has always held a large social aspect. For many customers, part of the reason for going to a retail store is to seek social engagement with others. Discussing products, observing others and learning are key aspects of being in a physical store which cannot be matched in a virtual world. (Bell, 2013). In addition, customers highly value the extra information and tips in-store employees can provide (Lesonsky, 2014).

    Of course, a lot of businesses are trying to make up for the lack of contact by providing ‘social shopping communities’. Here, social networks and online retail are linked to give customers a chance to share information and discuss purchases. (Yadav et al. 2013). Other online platforms, like BevyUp, provide the option to ‘shop with friends’ t reproduce the feeling of actually shopping with friends. (BevyUp, 2014) Still, real-life contact with another human being can not be reproduced through a computer. Which is why I believe, even in 20, 30 or 40 years, physical stores will still exist. I do,as you also stated in your post, believe it will likely be a highly integrated combination of online, offline and mobile strategy.

    Last, I do want to bring forward another brief point that is working in favor of the offline market. We have to acknowledge the fact that there are products out there that are simply not designed for sales through the online channel. It is not to say that businesses will not try to push these to the online world as well but these products do present some more difficulties. For example, products like fruit and vegetables that are heavily dependent on external factors for it’s quality. Customers will most likely want to see these products before buying them. However, I am absolutely sure that when companies get the chance, they will try to bring as much products to the online market as they can.

    Lesonsky, R. (2014) ‘Study Shows Consumers Prefer Shopping in a Store, Not Online’, Small Business Trends. URL visited on September 19, 2014.

    BevyUp.com (2014) Features. URL visited on September 19, 2014.

    Yadav et al. (2013) ‘Social Commerce: A Contingency Franework for Assessing Marketing Potential’ Journal of Interactive Marketing, vol. 27, no. 4, pp. 311-323.

    Bell, D. (2010) ‘Shopping as We Know It Will Disappear. Con: We Still Live In The Real World’ Businessweek.com. URL visited on: September 19, 2014.

  2. 345510jr says :

    I agree with you that retail has a hybrid future. Another argument that I would like to add is the role that the physical stores play in the ‘reverse logistics’. When customers want to return a product to a retailer, they often prefer to hand in the product at a physical store instead of sending the product to the retailer by mail. This is due to the fact that when they send a product return to a retailer, they have uncertainty about whether the retailer has received the product (in the right condition). The retailers also often prefer to collect returned products at the physical stores. The first reason for this is that customers often return ‘defect’ products, which are not really defect. Often, the customers just do not know how to use a product. In the physical stores, customers can be informed about how the product really works while it is harder to give this after-service through the online channel. The second reason is that customers often return products which cannot be sold as new again. In the physical stores, these products can be sold without the original packaging as store model against discount, while this cannot be done through the online channel. The third reason is that customers often return products which are in poor condition (e.g. already used or without the original packaging). In the physical stores, the employees can debate and negotiate with the customers whether they should receive their purchase money back. It is harder to debate or negotiate with the customers through the online channel. This shows that, out of a ‘reverse logistics’ perspective, there still will be a role for the physical stores in the future.

    Sources:

    – Blackburn, J. D., Guide, V. D. R., Souza, G. C., Van Wassenhove, L. N. (2004)
    ‘Reverse supply chains for commercial returns’, California management review,
    46(2): pp. 6-22.

    – Mehra, G. (2011) How Larger Retailers Integrate Physical Stores with Ecommerce Sites, http://www.practicalecommerce.com/articles/2994-How-Larger-Retailers-Integrate-Physical-Stores-with-Ecommerce-Sites

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