Retail Struggling to Navigate Between Physical and Online Stores

John Scott
Posted by in Retail

With a heavy growth in online stores, companies in the retail industry are struggling with keeping customers coming back to their brick-and-mortar locations. As customers are turning towards e-commerce, retail stores must find new and innovative ways to compete in the marketplace. Physical locations are still the most popular places that people go to shop, but they can only be successful if they find a reason to entice customers in.

Online retailers provide convenience that physical stores cannot. Online stores allow you purchase gifts for several family members, order pictures, and even order groceries while you're still in your pajamas. This can appeal to those who lead busy lives and to those who prefer not to face people in a crowded shopping mall. In December 2013, IBM Digital Analytics reported that online sales in the few weeks before the Christmas holidays were up nearly 40 percent from the previous year. While these figures were excellent for online stores, this left UPS and FedEx unprepared for the increase in deliveries. Packages were not delivered on time, leaving many customers angry. Insufficient delivery times and online account security are two major online risks some people have with e-commerce, which is one reason why physical locations will continue to see customers.

Customers have not completely abandoned physical shops for online stores. Online shopping may add convenience to customers, but a physical store enables you to try on clothes to find a perfect fit. You can also touch the items and try them out before you purchase them. This is a bonus for expensive items such as computers and other electronics. While customers still enjoy the experience of walking into a retail mall and seeing the new offerings in person, they are also supplementing their shopping with online stores.

To remain competitive, many retail stores are allocating space within their stores to fulfill Internet orders. Companies such as Best Buy and Wal-Mart offer site-to-store shipping that allows the customer to collect their merchandise at the store to save on shopping costs. In many cases, a customer can shop online with online retailers for the best price on a particular item, purchase it for the lowest price, and then pick the item up at the retail store the same day. The increase in e-commerce has also caused many retail locations to close their doors. According to the Wall Street Journal, Macy's Inc. announced plans to close five stores and lay off 2,500 employees. JCPenney also had to close the doors on thirty-three stores, which cost the company over 2,000 jobs due to the competition from online stores.

The key for retail locations to learn how to deal with online stores is by finding the right mix of online and retail sales. Some companies, such as Apple, seem to have achieved that, but it's up to the rest of the industry to follow suit to remain competitive.


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