Retail has been harder hit than almost any other business sector. The changes in lifestyle and habits that Americans have recently adopted have significantly shifted shopping patterns. But while initiatives to engage with customers in the online space have accelerated, the long-term importance of strategic brick-and-mortar strategy remains essential.

E-commerce A Bright Light in Retailer Sales

Though non-essential brick-and-mortar purchases have ground to a halt, online spending has grown. Retail spending was down 8.9% in March from the previous month[1]. But even as total sales volume has decreased, online sales have increased substantially. As of mid-April, it is estimated that U.S. retailers’ online revenue growth is up 68% Y-O-Y[2]. This is an encouraging sign as it indicates that Americans’ appetite to purchase still exists while shelter-in-place orders are in effect. Following implementation of social distancing practices, online shopping has become more important for many US consumers.

Brands Embracing E-Commerce to Create Meaningful Experiences

As the importance of e-commerce grows, brands will continue to create meaningful experiences for their shoppers; those innovations will now increasingly be implemented through an omnichannel platform. For example, customers who shop at Vans.com can now participate in a program that sponsors local skate shops for certain purchases. This option allows shoppers to meaningfully engage with their community from the comfort of their home. Similarly, REI’s homepage features articles that give advice about outdoor recreation and home workouts, as well as localized suggestions based on the shopper’s zip code. By adding non-shopping-related content to their landing page, REI is able to define and built affinity with their brand, even when stores are closed. Nike is another standout retailer that is continuing to foster engagement with online shoppers. Its website features profiles of star athletes, blog posts about fitness, and also advertises its interactive app platform. This diverse content provides inspiration and community as well as access to products. Like Vans, REI, and Nike, competitive retailers will continue to build-out their e-commerce platforms in order to engage with customers who are increasing their online spending.

Brick-and-Mortar Remains Crucial

What does the growing importance of e-commerce mean for physical locations? The recent increase of online buying does not lessen the importance of a brick-and-mortar strategy. In a study commissioned by ICSC in 2019, customers who shopped first at a store and then went to that retailer’s website within 15 days ended up increasing their spend by about 167 percent[3]. This goes to show than even in an era of increased online purchasing, retailers with well-positioned stores in strategic markets will have a dramatic advantage over pure “e-tailers”. Likewise, consumers who visit a retailer’s website are shown to spend an average of 131% more during an in-store visit within the next 15 days [4]. Companies that started as e-tailers, including like untuckit, Warby Parker and Casper, attest to this phenomenon:  all have opened physical locations. As many online-first brands have recognized, the relationship between online and brick-and-mortar shopping is interdependent. Even if increases in online shopping continue after social distancing policies are relaxed, brick-and-mortar locations will still be a key component of most brands’ retail strategy.  

[1] US Census. https://www.census.gov/retail/marts/www/marts_current.pdf.

[2]Emarsys. https://ccinsight.org/observations/us-retailers-see-online-growth-yoy-in-april-similar-to-recent-holiday-season/

[3] ICSC, “The Halo Effect”

[4] IBID