The heart of omni-channel is still the physical store

By Steven P. Dennis

You can fixate on the decline of brick & mortar retail all you want, but for the foreseeable future–in the vast majority of product categories–more than 90% of sales are still going to be done in physical stores.

You can make a big deal of the hyper growth in your digital channels, but don’t forget that many of those customer relationships started in a store. And many of the sales you ring up as a web order originated through exploration done in a physical location.

Sure, there are a handful of web companies where expansion into brick & mortar sites is secondary and mainly serves as a way to address the shortcomings of a purely digital experience. But for the overwhelming majority of brands, the physical store will be the dominant driver of sales, whether that revenue is actually booked in a store or not.

The other often neglected fact is that for many retailers their most profitable customers purchase regularly in both brick & mortar and e-commerce channels. If the physical store experience wanes, you can expect overall sales and profits to suffer. 

As industry analysts and the press hyper-focus on a company’s e-commerce performance, the danger is that physical locations get short-changed. We are already seeing many retailers disinvest in their stores. These brands should tread very carefully.

As there is a continued rush to “right-size” store counts, many retailers will discover that closing stores will dramatically affect their e-commerce growth in the vacated trade areas. If your store closing analysis doesn’t include the impact on your web sales you are making a huge mistake. Too many stores were opened pre-recession. Too many stores will be closed in the next few years. Tread carefully here as well.

Without question you should be investing mightily in digital capabilities and just about anything mobile. But physical retail is likely to remain the heart of omni-channel for most brands for a long time. 

You can go on and on about omni-channel this and omni-channel that, but screw up the store experience and you will be paying the price for years to come.

Steven Dennis is a senior omni-channel retail executive and strategic growth advisor at SageBerry Consulting , LLC. . He is also a Former Chief Strategy Officer at Neiman Marcus. [More about Steven P. Dennis]

Published with permission. This post originally appeared at Steven P. Dennis' Blog on June 4, 2014. Copyright 2014. Follow Steven P. Dennis' Blog on Twitter.


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