Whitman Voices

Introduction

Brick-and-Mortar Retail: A Physical Advantage in a Digital World

Brick-and-Mortar Retail: A Physical Advantage in a Digital World

Back in September, the popular fast-fashion retailer Forever 21 filed for bankruptcy. The company, which sells mostly women’s and teen girl’s clothing, has been struggling ever since. On Monday, Feb. 10, Forever 21 agreed to sell all of the brand’s assets for $81 million to Simon Property Group and Brookfield Properties. Forever 21 is just the latest in a long series of brands that once thrived through their brick-and-mortar locations that have had to close hundreds of their stores nationwide. 

In the past few years, several major retail companies have made news for showing signs of financial struggle or closing significant numbers of their physical locations. These empty storefronts and deserted malls are a direct result of brick-and-mortar’s unsuccessful competition with the world of online retail. Sears is another example of a household-name retailer that filed for bankruptcy and closed significant store locations. Still, in other cases like ToysRUs, brands are forced to cease operations altogether in the wake of an e-commerce takeover.  

The growth of digital merchants has only caused the trend of a brick-and-mortar decline to become more familiar in the retail space. To compete with online retailers they view as a threat, brick-and-mortar stores have cut prices, which in turn require them to cut operational costs. According to Sharmila C. Chatterjeein USA Today, this put brick-and-mortar stores at a disadvantage because they did not make the investments necessary in staffing, training and product development to improve their stores. 

Consumers have grown accustomed to standards set by online sellers, like Amazon and its shipping speed, but these standards are showing signs of unsustainability. Business media outlets like Forbes contend that brick-and-mortar stores can stay competitive in the changing retail landscape if they engage in reinventive operation strategies.

A way that companies can succeed in helping brick-and-mortar stores stay competitive is to adjust their business model to integrate the physical and digital retail space. 

“Businesses that integrate brick-and-mortar with online retail will see that they have more contact with the end consumer,” says Ray Wimer, retail management professor at the Martin J. Whitman School of Management. “A downside to this is that operationally, having a storefront is very different than running an e-commerce site.”

Best Buy is one company that has integrated the two successfully. Best Buy has taken advantage of its physical store locations by offering pick-up for online purchases to increase delivery speeds. They are also focusing on renovating showrooms and educating their employees on current products and technology to make an immersive experience for the customer.

“I think physical stores may also start to carry less inventory in the future and be open to having the consumer experience their products in-store then acquiring the goods through delivery later,” Wimer explains. “However, this will only work in bigger metropolitan areas.”

Still, despite the decline of brick-and-mortar retail, brands like Warby Parker, Casper and Glossier that launched and thrived through e-commerce sites have since opened physical stores to increase brand awareness. Wimer believes this trend will continue.

“It is not just about building brand awareness,” he says. “It is also about having direct, in-person contact with the customer.”

To compete with an e-commerce space that is only growing, stores must put quality and customer service first. In the end, this will go further for companies than the perks of low costs and fast shipping provided by online retailing. As Wimer explains, the ability to experience a product is a significant advantage for brick-and-mortar stores.

“People are tactile and like to touch and try items before they purchase,” he says. “This will never go away.”

Learn more about industry trends in retail management.

Lindsey Godbout
Latest posts by Lindsey Godbout (see all)