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Brick and Mortar Retail is Not Dying

December 12, 2017, 07:00 AM
Topic: Retail
Related: e-commerce, Retail

Brick and mortar retailers are closing in record numbers this year, but if you take a closer look at the list of retailers closing their doors this year you will notice approximately half of all the closures are by national retailers such as Payless Shoes, Radio Shack and The Limited. Many believe that e-commerce is rapidly taking over the retail industry and will eventually lead to the death of the brick and mortar retailer.

E-commerce is definitely growing at record levels, but online sales are still only a small percentage of the total retail picture. According to the U.S. Department of Commerce, in 2016, e-commerce accounted for $389.9 billion of the total $4.849 trillion in retail sales, or roughly 7.8% of total retail sales. Nine out of ten of the top U.S. retailers are brick and mortar stores, with Amazon being the only exception. Among those nine retailers, all but one generated sales growth in 2017.

Noteworthy is that the only non-brick and mortar retailer, Amazon, just made a major commitment to brick and mortar with its recent acquisition of Whole Foods.

While most of the top-nine brick and mortar retailers have an online presence, sales at the store location are much more profitable than their e-commerce orders. Average store margins for online sales decreased steadily this year to approximately 9%. Contrary to popularly held belief, the profitability of their brick and mortar locations is helping to subsidize the online businesses.

Millennials and the post-Millennials "Generation Z" prefer to shop at a small local retailer. According to a recent survey conducted by Accenture Research, over 70% of Millennials and Generation Z consumers said brick and mortar stores are their preferred shopping preference. A 2016 Deloitte survey discovered that 4 out of 10 consumers polled planned to shop in local independent stores for the holidays, even if items are more expensive. The publication Retail Dive recently performed a survey asking why consumers prefer to shop in stores instead of online. The main reason given was a desire to see and try out products before purchasing, followed by the ability to take home products immediately, return items easily, enjoy the in-store experience, and the ability to pose questions to store associates. Out of all the consumers surveyed, only 7% responded that they only shop online.

Although the reports of the apocalypse of brick and mortar retail may be overstated, we cannot ignore the increase in online shopping. The successful brick and mortar retailer will need to understand the current trends and shopping habits of its customers. Studies show that approximately 80% of shoppers do online research before making a purchase at a brick and mortar store. Having a website is a definite requirement for retailers. The website needs to be user-friendly and detailed as to the type of product carried. By posting videos on websites it is easy to explain the type of product carried and what makes the retailer better than the competition. It also helps to keep the attention of potential customers researching the retail location. Product testimonials are another important item to add to websites to gain the confidence of the customer.

Having a strong social media presence is also imperative to success. Approximately 40% of individuals between the ages of 25-44 use social media to research products before making a purchase. It is important to use Facebook and Instagram to announce new products and promotions. It’s also a great way to get feedback from customers as to what they like or dislike.

Retailers should monitor social media sites and promptly reply to questions to stay in touch with customers. Online blogs are also a great way to stay in touch with customers and to keep them informed of what’s happening at the retail location. Most online advertising is very inexpensive and a tremendous way to stay in touch with your customer base. If products are being sold online, it is a good idea to advertise in-store specials to encourage customer visits to the retail location. Once they visit the retailer, it opens other opportunities to sell them even more products.

The successful brick and mortar retailer will need to have a thorough understanding of their customer base and buying habits. This is one area where e-commerce has an advantage and does a much better job than their brick and mortar counterparts. Amazon, for example, does a great job tracking customer purchases and what times of year they shop. Brick and mortar retailers need to put more focus on who their customer is, their buying habits and personal information as well. When is their birthday or anniversary? One way to do this is to offer a discount on a future purchase if they answer a survey. The survey should ask questions to help you understand what the customers preferences are, important dates for the customer, and what they like or dislike about the store.

A recent survey conducted by the National Retail Federation revealed that 85% of shoppers will abandon their intended purchases if prompt assistance is not provided. Many also valued a personalized experience and smart recommendations. The successful retailer must offer their customers a VIP experience. Staff should be trained to engage with customers in a friendly manner. Offer little perks to personalize the buying experience, such as free cups of coffee. Offer warranties and guarantees that let customers know that this is the right place to do business. The return policy needs to make returning product hassle free and quick.

Brick and mortar retail is not dying; however, it is going through a huge transformation. In order to survive, retailers are going to have to adapt to changes required by consumers’ buying habits, become proficient in the use of social media and have a better understanding of their customers and their buying habits.

Bob Epstein
Chief Executive Officer | Eaton Hudson Jewelry Advisors
Bob Epstein is CEO of Eaton Hudson Jewelry Advisors. Eaton Hudson provides guidance to store owners seeking to turn around a business, sell off unwanted inventory, or liquidate an entire store. Epstein joined Eaton Hudson as chief executive officer of its Jewelry Advisory Division in 2016. Recruited from his longtime CEO role at Silverman Consultants, Epstein has over 25 years of experience in finance, operations, strategic planning and corporate accounting. He also has extensive experience in the areas of inventory evaluation, restructuring, bankruptcy, crisis management, budgeting and financial planning.

Over the years, Epstein has led projects for numerous major jewelry liquidations, including Whitehall Jewelers, Friedman’s Jewelers, Ross Simons, and Samuel’s Fine Jewelers. Additionally, he has led projects for over 1,000 independent jewelers, including promotional events, downsizings and liquidations. He also has led many non-jewelry liquidations, such as K-Mart, TandyCrafts, Herman’s Sporting Goods, and Hart, Schaffner and Marx Men’s Clothiers. For more information, visit
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