Looking at last year's sales and consumer behaviors may not be an exact indicator of what to expect for this year, but it can give you a starting point. The more you know about where and how customers are making purchases, the more you can tailor your approach to appeal to the modern consumer. In 2017, retail had a great year, though ecommerce played a very large role in total sales. Let's take a look at some of the stats and how brick and mortar stores performed.
Identifying Trends and Big Growth Industries
When you know where people are spending their money, you can adjust your stores to highlight those products. In 2017, home improvement was a major contender. Building supplies and gardening equipment showed 8.1 percent growth. Just behind that was furniture and home furnishings with 7.5 percent and the always popular electronics and appliances category at 6.7 percent. This trend shows a focus on home. Today's consumers are more engaged with improving their living spaces than virtually any other category. Of course, much of that shopping happened through alternative routes like websites, mobile purchasing and other omnichannel sources.
Foot Traffic Drying Up
Fewer people head out to stores when they want to make a purchase. With the average user touching their smartphone nearly 3,000 times per day, consumers have the world's largest shopping mall in their pockets. Industry giants like Amazon have created logistics processes that allow for same day delivery, giving consumers all of the instant gratification of in-store shopping without spending a penny on gas. This convenience improvement is just one of the reasons people are spending less time at stores and more time at home. During what is historically the busiest time of the year--November and December--foot traffic in brick and mortar stores was down 7.5 percent.
Sales Fall with Foot Traffic
As fewer customers make the trip to store locations, sales fall along with the lack of buyers. In-stores sales fell by as much as 9 percent according to some November surveys, while December did not offset the drop with another 5.5 percent decrease in at-store purchasing. While these foot traffic numbers have been deadly for some larger retail chains, it doesn't seem to be affecting more specialized retailers or the number of stores opening. While overextension and nearly complete market penetration are causing some of the largest retailers to close stores, total net gain on storefronts was 4,000 in 2017. Less, but more deliberate, foot traffic could lead to solid gains with the right store concept.
Omnichannel Is the Future of Big Box
Showrooming is here. There is no way to prevent shoppers from comparing in-store items to online catalogs, and the smartest retailers know it and use it as an effective tool. Price matching is just one way to close a sale with a customer that is using your store as a 3-D catalog. In-store pick-up, flexible payment options, and loyalty programs all have a place in driving foot traffic to big-box retailers. With ecommerce up 17.8 percent in 2017 and predicted to increase another 15.3 percent in 2018, the need to incorporate these channels is clear. While some predictions put Amazon far ahead, and the e-tail giant already accounts for more than 40 percent of US online retail sales, other major chains are making even faster inroads, though to an admittedly smaller customer base. In 2017, Amazon posted 27.5 percent growth. That not only outperforms the general retail market but slams the ecommerce category, too. Walmart, Best Buy, Kohls and Target all posted even higher gains, and that doesn't include the 62.4 percent from Costco.
Super Supply Chains Drive Omnichannel Efforts
What has really helped push these stores into double-digit growth is a focus on supply chain management. Faster delivery from the manufacturing floor to customer houses means that even last-minute shoppers aren't limited to in-store buying options. Amazon demonstrated the possibilities with fulfillment centers nationwide that put them within 20 miles of approximately 60 percent of their customer base. Big box retail already has what amounts to fulfillment centers in the form of stores. Improving logistics and the movement of goods allowed major chains to dramatically shorten shipping times and improve the online experience for their existing customer base.
E-Commerce versus Brick and Mortar?
While physical stores are struggling more than ecommerce businesses, things may not be as bleak as some headlines are touting. Yes, fewer people travel to stores to make purchases, but sale margins are up. Faster shipping means less overstock and reduces the need to clear shelves for seasonal items that didn't move. For successful brick and mortar stores, ecommerce is a major slice of the sales pie. The question isn't about choosing between ecommerce and brick and mortar. It's all about creating systems that leverage the best of both. With online customer experiences, the flow is smooth and nearly frictionless. Translating that to in-store is challenging, but not impossible. Some of the most successful retailers with store locations include buy online and pick-up-in-store options to help.
Onestop Internet brings all these aformentioned services together, putting the tools that power great commerce into the hands of retailers. Economies of scale make the difference between struggling to keep up and confident, sustainable growth in ecommerce. With a vertically integrated partner on their side, organizations can focus on the products and services they know best while reaping all the rewards that come with advanced, international operations.