Amidst online retail’s double-digit growth, brick-and-mortar stores are resizing their floor footprint into a leaner model that focuses on customer experience.
A real estate industry report cited in an article on Anchorage Daily News’ website noted the innovation occurring in retail. Overall, retail sales grew by 7 percent between October 2010 and October 2011, while e-commerce gained double-digit growth each month. People are drawn to online shopping for convenience, but the shopping experience, which includes the store’s appearance and customer service, still attracts customers. Stores have become a display mechanism. This is why retailers are reducing their floor footprint so they don’t have the added cost of these huge stores. It’s common now for retailers to rationalize every product SKU they stock.
Industry experts are seeing three key trends transforming in-store retail:
- Reduced real estate. Huge stores mean a large budget line item for real estate, and retailers are discovering that scaled down stores don’t hurt overall sales. In fact, a smaller store can help national chains work better in smaller markets.
- Strategic in-store inventory. With the growth of e-commerce, stores often function as a showroom for online sales. Retailers only need to display what they think their demographic will buy. CEOs need to have all their planners rationalize why they are displaying each item.
- Team up with online commerce. E-commerce doesn’t necessarily take away from in-store sales. It can encourage customers to visit stores and retailers’ websites more often, which can lead to more sales.
Source: Anchorage Daily News, Febraury 2012