E-commerce does not replace brick-and-mortar retail; it strengthens him

Over the last ten years, the retail industry has undergone a seismic shift as the once high street-dominated industry began to move online – an initial gradual trend that intensified during and after the pandemic. Today, e-commerce penetration is growing rapidly. Australians spent $63.6 billion online in 2023, with eight in ten – or 9.5 million – households shopping online all year round, and around half doing so monthly.

At various times and to varying degrees, some industry commentators have argued that the spread of online shopping will pose a huge threat to physical shopping. And while this has undeniably changed the retail landscape, the demise of brick-and-mortar stores has been exaggerated. In fact, in the era of unified commerce, taking advantage of the dynamics of shopping both online and in stationary stores is the key to success in retail.

Technology does not replace brick-and-mortar retail; it strengthens him. But how is it done? How can retailers leverage technology to simultaneously improve their physical stores?

A unified approach to omnichannel consumers
According to research by Lightspeed, a unified point-of-sale and payment platform used by thousands of retailers in Australia, we are more likely to shop in-store than online and use online channels for brick-and-mortar shopping.

The study found that more than three in four (76%) respondents shop in stationary stores at least once a month, while 43% shop online for essentials at least once a month – 33% less than in stationary stores. Interestingly, many people use both channels at the same time. The study shows that almost half (45%) of respondents look for a product on the Internet at least once a month before making purchases in a stationary store. Almost one in five (18%) did it “more than a few times a week.”

So not only are physical stores still able to attract customers, but online channels are driving their sales as much as replacing them – 18% compared to 14%. With all the opportunities, access and convenience that e-commerce offers, retail provides tactile experiences – such as trying on an outfit, comparing products or talking to a salesperson – that online cannot provide as easily.

So with e-commerce acting as a driver of in-store purchases rather than just a threat to them, how can retailers use their online channels to drive people to the store and their store to build relationships and loyalty?

Inviting customers to the store
Because online channels are so important for consumers to search for products and retailers, it is important for retailers that their in-store inventory is visible and accurate online. In fact, when asked what services they expect from retailers, 42% of buyers answered that they can check the availability of goods online before visiting the store.

It was the the most desired feature, more popular than even loyalty programs. Another key desire of 19% – the fourth most popular – is click and collect. This provides the convenience of e-commerce and eliminates the need for delivery, which can be unreliable and expensive. Indeed, 53% said that shopping in stores allows them to “avoid shipping or return costs.”

More than half (56%) of consumers are drawn to physical stores to see products in person – including samples and trials. Once there, retailers can focus on providing meaningful experiences and building personal relationships that may be more difficult to establish with online shoppers.

Strengthening bonds, encouraging loyalty
Despite all the convenience and access that e-commerce provides, once shoppers are in-store, it’s easy for retailers to provide the attention and community that their customers crave. Lightspeed research shows that 34% want access to special offers for local residents, which in-store retailers could well take advantage of.

A quarter (25%) also want personalized customer service, which is often the case in face-to-face retail. Unique and local products (25%) and combining value with the company (24%) are also key loyalty factors.

With the right in-store technology, retailers offer many of the same benefits found in e-commerce, from payment flexibility such as buy now, pay later to access to loyalty programs and gift cards. Ultimately, with technology facilitating the meaningful connections that retail is built on, retailers can provide customers with omnichannel experiences that foster loyalty.

Despite all the narratives about e-commerce vs. brick-and-mortar retail, they should be considered complementary strategies, not competitive ones. While e-commerce penetration is increasing, it is not just a platform for online sales, but also a way for consumers to discover and engage with brick-and-mortar stores. The more retailers can leverage these channels to enhance the other, the better they will be able to succeed in the rapidly evolving world of retail.