Stores and E-commerce - the Conjoined Twins of Retail

store-online 730x280.jpgHere’s something interesting:

According to data collected by SimilarWeb, when a retailer closes a brick-and-mortar location, its e-commerce site is adversely affected. Sears, Macy’s, and Payless—all companies that have made headlines for shuttering multiple storefronts in the past year—all saw noticeable declines in web traffic in recent months. Macy’s traffic dipped 11%. 

Payless.com saw an increased bounce rate, while consumers were viewing the same number of pages per visit. 

So, what’s happening?

There are a few different theories.

It could be that bad publicity is driving consumers away, which is always possible—consumers are much more socially conscious these days, and a retailer potentially putting people out of work can be met with disapproval. Or, it could be that declining sales aren’t exclusive to the retailer’s brick-and-mortar location and sales have dropped across the board. Though, that doesn’t seem to be an adequate explanation, as Macy’s e-commerce sales were doing just fine before the announcement of the store closings.

My guess? It has to do with the new way consumers shop.

Just a few weeks ago, we discussed research that found consumers blend their shopping experiences, preferring, to say, comparison shop in-store before ultimately purchasing online. In fact, 62% of surveyed consumers indicated they wished to examine products in-person before making a purchasing decision, especially if the product is particularly expensive and/or a non-every day purchase.

And for retailers who adapt, it can pay off.  Just look no further Best Buy. Though the popular joke is the electronic chain’s brick-and-mortar locations are little more than Amazon showrooms, in actuality, they’ve proven to be much more effective in driving traffic to Best Buy’s e-commerce site. This symbiotic relationship between the physical and digital has allowed the company to thrive while competitors like Circuit City have died out.

But overall success isn’t just about bringing e-commerce to brick-and-mortar. It also works in reverse.

Don’t forget those born from e-commerce

Lately, e-commerce companies have ramped up expansion into brick-and-mortar retail. We’ve previously covered Amazon’s foray into both convenience and book stores, but while they’re certainly the most notable, they’re far from the biggest.

To name just a few: Warby Parker announced this week plans to open three more physical stores in Texas. Harry’s, an online razor seller, has opened up neighborhood barbershops where consumers can get a shave with, you guessed it, Harry’s products. Indochino, which originally opened as an online-only way for men to order custom shirts, has announced plans to open 150 stores by 2020.

Why?

Carl Waldenkranz, co-founder of Tictail, explains in Forbes:

“At a time when anyone can create a professional-looking website at no cost and start a US corporation regardless of where they are located in the world, having a physical presence is a clear metric of brand legitimacy and perceived success. Google has realized this, and offers prime real estate on the search result page to the physical presence of a business.

Taking into account the range in real estate prices (especially when it comes to geography and square footage), startups have the surprisingly affordable opportunity to leverage a brick-and-mortar to boost brand trust signals, offer an in-person touchpoint to a digital brand, and take advantage of the space as an additional marketing resource for building brand awareness and rallying the community.”

So, it appears the inverse of SimilarWeb’s research is also true:  Increase your brick-and-mortar presence and see an increase in web traffic (thanks largely to Google).

Takeaway

Admittedly the data SimilarWeb collected is sparse; both in the number of store’s surveyed and the length of time web traffic was monitored. Still, it’s an interesting trend that seems to be yet another indication of the importance of an omni-channel approach to retail.

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Topics: retail stores, ecommerce, consumer habits

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