Brick-and-mortar and e-commerce have been fighting for consumers’ attention and dollars for many years. One might think that e-commerce is already the leader of retail sales, but this is way far from the truth, with brick-and-mortar sales accounting for 94% of the total retail sales.
However, it’s unfair to compare online sales with brick-and-mortar sales because of the age factor. E-commerce is still a relatively new business, and with the rate of growth it has demonstrated in recent years, this statistic may soon change.
We cannot ignore various advantages that e-commerce has brought that haven’t been possible before. Just one click, and your order is at your door the next day. This is indeed the number one reason why people prefer shopping online - (free) delivery.
Other key reasons include the ability to use coupons and apply discounts (41 percent), read other customers’ reviews (35 percent), easily return purchased items (33 percent), and a quick checkout process (30 percent) (Globalwebindex.com).
There are two sides to the success of e-commerce. One side is the advantages above, that comes with the nature of online sales. Other side is the ability to track visitors’ behaviors and understand the customers. For instance, how many people land on the product webpage, how much time they spend, what actions/clicks they previously and subsequently take and so on… Having this data, online businesses are able to change their layout, optimize their online marketplaces and better serve customers’ needs, which leads to gaining more website traffic and sales.
If the brick-and-mortar businesses bring these advantages of e-commerce into their stores, or let’s say, combine them with their existing services, can they heat up the competition? Or first… can they actually bring these to the stores? Let’s consider a scenario.
A beautiful Saturday at noon, after a family brunch, you decide to go to a furniture store to buy a TV unit for your living room. You take your phone and check the store, and see that there are 184 people currently inside (1). You think to yourself, hmm… not that many, we can enjoy our time there, and have a fast checkout. You arrive at the store, see the empty parking slots in your phone (2) and navigate to the closest available slot (3).
As usual, you leave your car and head to the gate, and the heat of the store welcomes you inside. Not just the heat, but a notification on your phone: “Thank you for being a loyal customer, enjoy your 15% discount in our restaurant” (4). You pass through the mattresses, then sofas before the TV units. A sofa draws your attention and you start looking into it. It looks great but you are not sure about some aspects, so you take out your phone and see your location in the store (5). Next to your location, you also see the sofa and click it on the map, 4.8 stars, 56 reviews (6)… hmm, not bad. You scroll down and read some reviews about people’s experiences, now you want to buy the sofa but need answers to a few questions before finally deciding. Right when you need some assistance, a store associate approaches you (7) with a smiling face and goes “Hi, would you like any help?”. You direct your questions and are pleased with the answers, but looking at the price again, you decide to postpone your purchase.
Still walking around the store, but could not find the TV units yet, you are getting tired. How can I find them as soon as possible? You take out your phone again and type TV units in the search bar on your browser, and it shows you the shortest path to the TV units from your location (8). You follow the route and arrive after a few minutes, test a few and read some reviews, and you go for the black one. Pleased with your decision, you head to the checkout. Close to the checkout area, you receive another notification “Show the code SOFA10 at checkout for a 10% discount on sofas” (9). You directly turn back and load the sofa you liked into your cart, and come back to the checkout area. Again looking at your phone, you see that you will wait the least at Checkout #4 (10). After a few minutes, you head to the restaurant and enjoy a meal with the family using your discount code. Then search for your car in the map, and navigate to the exact slot, to go home and enjoy your furniture during the rest of the day.
Let’s have a look at this scenario also from the store manager’s perspective. A lot of people are coming into the store, using different paths and spending time on products. Is it possible to get all this data and analytics, just like online businesses are doing with Google Analytics?
1000 customers enter the store (a) and follow different paths inside (b). 200 customers spend more than 10 minutes in kitchen appliances (c) but the store makes only 10 sales, which means that there is high traffic, but low conversion rate, with 5% (d). This might be because the product is placed on a hotspot and people don’t need them. However the manager has the data that people spend more than 10 minutes, so he knows people need kitchen appliances. In this case, he can take different actions e.g. apply a different pricing, instead of changing the location.
From 1000 visitors, 400 people visit table lamps after visiting sofas (e). So the manager understands that there is a strong association between both, and he can strategically place low traffic products, e.g. bathroom appliances, between them to expose them to more people.
Getting all these data helps the store manager to take meaningful actions and optimize his store, just like an online marketplace.
The top reason (56%) why consumers shop in-store is the ability to feel & try the products. Nearly half of the consumers (46%) noted that the ability to deal with personnel directly is among their top reasons for buying products in physical stores. (2019 Future Stores Consumer Report). And in the scenario above, we see the many advantages of ecommerce combined with the experience of a physical store.
But is it possible at all? Are we already there technologically… or what about privacy?
Well… the answer is, yes. There are solutions addressing these topics in the market, from cameras to Bluetooth beacons, all coming along with distinct challenges.
While cameras and 3D sensors can help with people counting, they are useless when it comes to pushing notifications or providing navigation.
On the other hand, network and application based solutions can help with dwell time or with communication with the customers. However, not many people (<10%) connect to the network in the premises or install an application, which in the end does not provide enough reason to employ them.
Unlike cameras, network or app-based solutions, Ariadne senses the phone signals and detect unique antennas, with no interaction needed from the visitors. This way, it can count people with 98% accuracy and track the whole customer journey in the store. Phone signal tracking also enables pushing notifications and provides navigation when desired. The points made from “1” to “10” in “A beautiful Saturday” and from “a” to “e” in “From store’s perspective” can be all provided with Ariadne’s low-cost solution, which brings the advantages of e-commerce to the brick-and-mortar retailers. To get more information on how it can also transform your business, you can have a free 30 min demo call with our team.
With the scenario as above, can brick-and-mortar become like the new e-commerce? Well… of course it will not be another online marketplace, but it will stand out as a unique experience point for customers, which they have to be to thrive.
Technological innovations enable stores to focus and do more in omnichannel. In some cases, brick-and-mortar businesses are investing more into bringing an in-store feel to the digital experience. Virtual appointments, where sales staff utilize videoconferencing technologies to provide individualized attention to consumers, or using live streaming and sharing experiential content to engage with customers are just a few examples. (McKinsey)
On the other hand, there are more efforts in bringing the convenience of digital into the store experience. The pandemic has pushed retailers to redefine the role of physical stores and move beyond the traditional view they have set for them.
The evolution of the physical store’s role as a core component of the omnichannel journey has also affected store layouts. Many retailers started using their physical locations to educate customers about product options, strengthen their brand's positioning by delivering an exceptional experience, and drive more e-commerce sales. Indeed, research conducted before the pandemic showed that adding a new location boosts traffic to a retailer's website by 37% the next quarter (International Council of Shopping Centers, “Physical stores key to retail success, study finds,” October 15, 2018, icsc.com). New technology solutions, like ours - Ariadne, are altering store designs as well, tech-enabled stores have new models that enhance customer journeys. In this new model, sales staff keep their critical roles, but they now serve as more of a consumer advocate.
Hasim Koc Business Development Manager