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Physical vs Online: Which is right for retailers?


Retail just isn’t what it used to be. But no one ever said that was a bad thing. Its evolution has certainly created more competition than ever before, and we’re seeing a digital vs physical retail world. But what about the future of retail? Determining what’s going to be most profitable and successful is often a matter of A) Physical Store or B) Online Store. So, which is the right answer?


In online retailing, startup costs typically remain lower than opening brick and mortar locations. The time to market can also be much quicker for online retailers. Having an online presence also opens the doors to reaching a much larger audience ﹘ projected 224 million online shoppers by 2019 ﹘ than a physical retail location might. Add to that the ability to collect consumer data across digital platforms and provide shopping convenience, and it’s no wonder online retail has become such a force.

However, according to a BigCommerce report, the average conversion rate for a U.S. online store is between 2-3%. And a lot of that boils down to factors such as cost and physical limitations. The same report notes that 66% of respondents chose not to purchase an item because of shipping costs, and 49% cited not being able to touch, feel, or try a product as a major deterrent to purchasing online.

These are just a few reasons why brick and mortar stores remain the most popular shopping channel, with 64% of consumers still preferring to shop in-store. Brands can craft a unique, in-person experience while educating consumers on products first hand. They’re able to provide shoppers with instant access to products that they can touch, feel, and engage with. So they understand exactly what they are purchasing.

But as modern consumer behavior indicates, in order to be successful in today’s economy, brands have to get smarter about their sales channel strategies. Consumers today want to shop how and when and where they want. There’s no longer one way to shop. And consumers not only want to shop, they want a complete customer experience.

As Nordstrom President of Stores, James Nordstrom notes, “We don’t think the customer is loyal to channels. We don’t hear customers talk about channels very much. Customers value experiences.”

Nordstrom has been a prime example of a brand that has adopted and implemented an omnichannel customer experience. In late 2016, Telsey Advisory named Nordstrom as one of the “best positioned” in the omnichannel market. They’ve done so by providing customers with a retail experience that spans online, offline, and social media outlets. It also spans from the variety of consumer offerings they provide, with their discounted Nordstrom Rack brand acting as their largest source of new customers and as an entry point to omnichannel shopping.  

And a strong omnichannel approach means not only engaging and satisfying customers now, but in the future. According to a 2015 study by IDC, shoppers that buy on multiple channels have a 30% higher lifetime value than those who shop only using one channel. Additionally, companies with a successful omnichannel engagement strategy retain on average 89% of their customers, compared to 33% of companies with weak omnichannel engagement.

Consumers are flipping the script and there’s not one way to retail anymore if brands want to be successful. Online retailers need to accept their weaknesses and realize that those can be strengthened by what brick and mortar stores provide. And brick and mortar stores need to acknowledge their shortcomings by accepting the advantages that selling online provides.

So, the right answer to “What’s the key to our retail success?”, is not A or B. It’s C: Omnichannel.


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