Earlier this week, Wal-Mart announced they were laying off hundreds of employees to realign the business and help strength the companies’ ecommerce operations.
"To fuel our growth and our investments we have to manage our costs," Wal-Mart chief executive, Doug McMillon, wrote in a memo to staff reviewed by the Journal last Friday. "From time to time, you'll see the company eliminate positions in an effort to stay lean and fast."
They’re not alone.
Lowes, American Apparel, Macy’s, and Sears are just some of the major brand retailers who’ve shuttered operations in the past month (!), largely in an attempt to shift priorities and re-invest resources. Looking at them, and you’d think traditional brick-and-mortar shopping is on its last legs, sputtering to be put out of its misery.
So, that’s why a report by CBC this week was particularly interesting. Entitled 'I want to touch and feel': Online-only retailers open regular stores,” the article attempts to explain the trend of traditional web-based businesses opening brick-and-mortar locations (a la Amazon Go) when so many of their counterparts are closing up shop.
Every Customer is Different
First, the obvious: Not all customers are the same. Some want the convenience of online shopping. Others prefer the ability to examine products in-person prior to purchase. The latter rings especially true when it comes to fashion.
That's what Neil Blumenthal, founder of New York City eyeglasses company Warby Parker, has found, according to the CBC.
"People were telling us 'I want to touch and feel the glasses before buying them,'" says Blumenthal. He and his partners have opened two Canadian stores. They were among the first of the so-called e-tailers to act on the need for in-person interaction with customers, starting their real-world expansion in 2013.
Showrooming isn't Bad
Not only is showrooming a benefit to retailers moving to a brick-and-mortar model, but it could be absolutely essential for success. With so many customers perferring to "feel" the product before buying, how else will pure-play online retailers expand? There's actually a direct correlation between the two.
According to Drew Green, CEO of Indochino, a Vancouver-based online seller of men's made-to-measure suits that now operates showrooms in several U.S. and Canadian cities:
"In a market where we have a showroom, our online sales grow twice as fast as in a market where we don't. For example, in New York City online sales growth is double what it is in Chicago, where Indochino has yet to open a showroom.”
Generation Z Loves It
According to an IBM and National Retail Federation study, Generation Z prefers to shop in-store, but they demand an "always on," mobile-focused shopping experience. Or, in other words, the brick-and mortar locations that capture their attentions are those that could be defined as a “store of the future;” a blend of both the digital and offline worlds
Generation Z expects technology to be intuitive, relevant and engaging — their last great experience is their new expectation," IBM General Manager of Global Consumer Industries Steve Laughlin said in a press release. "This presents a significant challenge for retailers and brands to create a personalized, interactive experience with the latest digital advances or risk falling behind. This kind of innovation is not linear or a one-time project — it is a new way of thinking, operating and behaving."
Time to Change the Narrative?
Perhaps it’s time to stop thinking of brick-and-mortar closings as indicative of a decline in traditional “in-person” shopping, but rather retailers failing to seamlessly blend the in-store and e-commerce experience.