Retailing to E-tailing: In search for a symbiotic relationship

Online retail has seen an accelerated growth of more than 11% every year since 2011. The wide array of products, choices, convenience of shopping in your pajamas and most importantly cost has driven many a customer to shopping online. In fact, more than 25% of millennials believe traditional “brick-and-mortar” retail will be superseded by online retail.

 Given this trend, is it worth to analyze retail sales and stock in brick-and-mortar stores? The answer is surprising. To further explore this point, let us first look at the traditional retail supply chain as it applies to online stores e.g. Amazon, the 3rd best run supply chain among online retailers. Amazon is a heavy user of retail analytics including customer buying habits, preferences, warehouse stocking, inventory management and optimization among others.

Why is then Amazon looking for a new kind of brick-and-mortar store? The answer lies in the subtle symbiotic relationship between brick-and-mortar and online retail, that is probably often ignored.

Designer retailers like Bonobos and BirchBox started as internet-only businesses and have recently set up stores in New York City. Customers flocked to the Bonobos store that was barely a dressing room in order to try out their sleekly cut trousers or Euro-styles shirts. BirchBox customers shopped for hours to try out samples laid out exactly like their monthly subscriptions. In short, the online traffic stemming due to these brick-and-mortar stores was significant. It was also seen that customers on an average spent 20% more than online in these strategically located stores.

Traditional retail analytics measures like in-store sales, in-store retail stock, month-to-month growth, brand specific sales ratios are not designed to capture these advances. If Bonobos or BirchBox had relied on them, they would have missed a profitable trick.

This post is a call for action to develop metrics that connect your mobile phones and tablets with the stores on Main Street. Clearly, the future is one where “brick-and-mortar” stores will co-exist along with online e-tailers, but the relationship between the two will be forever changed and retailers with better and holistic metrics shall prevail.

NextOrbit Views

In this section, the NextOrbit team brings its analysis and views as a summary:

In this symbiotic future where retailers co-exist with e-tailers: Retail stores will enable and deliver focused customer experience. This will in-turn drive traffic to their online presence. Customers will be much better informed about products from online e-tailers and will choose brick-and-mortar shops to pick-up their goods.

Pure e-commerce players will acquire and develop retail fronts to connect better with their customer base, to have the customer’s touch, feel, and operate.

The metrics for employee and business development need to take into account this symbiosis e.g. how to reward a store for bringing traffic online? How to avoid penalizing a store profit for return of online shopped goods? etc.