Friday, 7 July 2017

Are Bricks-And-Mortar Fad or Fashion?

Online business has entered onto a stable stage with a broad range of products on a number of platforms, including Amazon online delivery, Alibaba B2B and B2C business model. However, as pointed out by some consumers, despite the apparent convenience it offers, not everyone is enthusiastic about shopping online. 

Online vs Offline

So why are some hesitant to jump onboard? Teresa Davies from Contemporary Consumer Behaviour pretty much summed it up last semester when she stressed the importance of the in-store customer experience. It’s true that online lacks the sense of sensation you get when you touch the texture of a fabric, the thrill of trying on an item or seeing it bagged up at the register, it even misses the post-purchase satisfaction of when you hand over your credit card. 

Bricks-and-mortar businesses still exist and continue to be ingrained in our daily lives but few people have realised that it also plays a main role in retailing. Although e-commerce is growing quickly on a global scale, nowadays physical stores will continue playing an important role in omnichannel retailing systems. However, is the existence of more and more physical stores popping up on busy streets a fad or fashion to attract customers?

The two go hand in hand.

Recently Louis Vuitton failed dismally when they opened their Supreme x Luis Vuitton pop-up store in Bondi, with customers waiting in line for eight hours on Monday morning from 3am, only to be told at 11am that the popular collaboration had sold out after just 10 to 12 people had been in. Besides waiting out in the cold, with no food, security and the general disorder of the set-up, customers were also told on Instagram by Louis Vuitton Artistic Director Kim Jones that they could pre-order the items he wanted from the menswear range at the George Street store. However when one unhappy customer went into the store, he was told he could only make an expression of interest, and says he then wasn’t even notified about the details of the pop-up store, but had to find out online.

One might imagine that multi-nationals such as Luis Vuitton would know better than to let their brand be negatively impacted by offering such a harsh customer experience. With better co-ordination and the convergence of online and offline, perhaps the fiasco could have been avoided.

Get ready to experience the future.

According to Tom Birtwhistle, senior manager in PwC’s digital strategy division in Hong Kong, “Bricks and mortar being dead is wrong. It just needs to evolve, into small-format stores, for example, and embrace in-store digital technology.” 

While it is true that shopping in physical stores might be done less frequently in the future due to the influence of digital, physical stores themselves will become more experiential and social with the benefits of technology development. This is how Amazon and Alibaba exist on the market with The Experience Economy.

Amazon, the online retail giant, has been in the bricks-and-mortar retail segment since 2015 when they opened up shop in Seattle in the form of bookstore. Now, there are 7 Amazonbooks stores in the US and another 6 stores are on the way. Besides book shops, Amazon is planning to open 2,000 Amazon Fresh grocery stores across the US within the next ten years. 

The retailer understands the role that physical stores play in building its brand in ways that it cannot online. Amazon will leverage the stores to showcase its own hardware products that are not sold by many other retailers; such as the Amazon Kindle and the Echo. 

Alibaba has invested in Suning, a partner with Bailian group in recent years on retailing. In early 2016, Alibaba has launched Hema Market in Shanghai focusing on e-commerce cashless-experience supermarket. Its branch Hema Fresh has bitten into China’s grocery market, trying to connect online and offline hands in hands by emphasising the physical store experience.

With physical stores, retailers could tightly control their brands and help customers understand how the products work. The benefits could bring their physical stores into the higher evolution stage of deep brand propositions.

So you tell me, are bricks-and-mortar fad or fashion? The answer relies on the business strategies of the retailer. The store could be stale without innovation for years, or it could be sensitive to the scent of model trends, opening up new opportunities and untapped potential. The fashion sense will enhance brand experience and build customer relationships for retailers for decades or centuries.

Hazel Chen
Current student from the Master of Marketing program at the University of Sydney Business School.

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