Last year, US retail sales were up 19.3% from 2020, even with the double body-slams from rising inflation and the still-slogging supply chain. Much of that number came from e-commerce transactions. Even in 2021, the pandemic had many brick-and-mortar retailers opening e-commerce channels—and based on the sales spikes those efforts had, some are considering dropping their physical locations entirely. But if that’s you, then you should put your thinking cap back on. Physical retail is rebounding.
Recent data shows that the skew toward e-commerce is righting itself, and that consumers are becoming very comfortable with in-store shopping again. In 2020, your town’s retail neighborhood probably looked a little dilapidated, with boarded-up shops, closure notices, and store clerks with enough spare time on their hands to make their own coal. That’s changed.
According to a new report by Morning Consult that surveyed more than 8,000 adults across the US as well as Australia, China, Europe, and Mexico, store closures are down a whopping 65% over last year. That should have forward-thinking brick-and-mortar retailers working on in-store shopping experiences, space optimization, and synergies between their physical locations and their new e-commerce resources.
In the first month of 2022, Morning Consult’s research shows US retailers alone announcing 1,910 new store openings, on top of 2021’s data that indicated significantly more store openings than closures year over year. The key for physical retail was and is convenience. If the product is in stock, it’s still more convenient to go get it rather than purchase it online and wait for shipping fulfillment.
The rise in physical store shopping means retailers should start focusing on building the most convenient in-store experience they can. E-commerce retailers, on the other hand, have to stop coasting. The pandemic bump looks to be over, so to keep businesses growing, you should focus on easier product discovery and ever-faster fulfillment strategies.
For brick-and-mortar operations, the main drivers are older shoppers and rural neighborhoods. The youngest consumers continue, predictably, to opt for web shopping. But those “older shoppers” include Gen Z and millennial consumers who still favor an in-person shopping experience. Rural areas, especially those where median household income is $50,000 or less, are also much more likely to opt for in-store shopping. This audience sees physical stores as offering more reasonable prices and likes the local deals and coupons they get at those stores.
For E-Commerce, It’s All About Fast Fulfillment
Whether you’re a brick-and-mortar retailer or an e-commerce shop, saying the supply chain slowdown is giving you a headache is an understatement. It’s more like someone’s been trying to give your skull a sunroof every day for the last couple of years. But e-commerce operations are a little more challenged, since speedy order fulfillment is one of the key ways consumers judge their online shopping experience. Physical retailers have a few more tools at their disposal, since they can directly connect with customers. A helpful smile across a counter is still a much better experience than a leave-your-comment-here form.
Demographic Profiles of Consumers’ Fulfillment Expectations
According to Morning Consult’s research, men, millennials, and city dwellers are driving the fast-delivery trend the hardest. That means if e-commerce and physical retailers are hoping for younger and more urban customers, they’d both do well to partner with an ultra-fast urban delivery service. But if you’re not in that audience boat, fast delivery isn’t much of a priority: Morning Consult’s data also shows many consumers are fine with up to a 5-day wait for certain kinds of products.
Younger customers also want to use the latest payment methods, and that goes for both online and in-store shoppers. Research from Global Payments has digital wallets growing in popularity along with other contactless and mobile payment methods, especially for younger consumers. That study shows 65% of millennials using a digital wallet in 2021, up from 59% in 2020. It also shows 57% of Gen Zers using one compared with 50% in 2020.
The Urge to Merge
If you’re a retailer with both a physical and online presence, you need to work on marrying these aspects of your operation. And the two best ways to do that are marketing and in-store pickup.
Morning Consult has in-store pickup still rising in November and December 2021, which makes sense considering that omicron and the holiday shopping season both spiked in that time period. But a significant number of those customers were actually hunting specific products. Apparently, product scarcity trumped both convenience or safety concerns. The pickup trend is slightly down in early 2022, but then so is retail in general.
This brings us to marketing, where product discovery is still a thorn in e-commerce’s side. Huge product catalogs can plop a long list of products in front of a web-browsing customer, but those consumers no longer find that convenient. They’re often shopping for something specific, and having myriad options, particularly if those “options” are merely loosely-related sponsored placements, is an experience detriment these days. E-commerce vendors must find better ways for consumers to find what they’re looking for while still effectively marketing the latest products and deals.
Retail’s New Normal
Just like employees need to adjust to a post-pandemic hybrid work world, retailers will also have to adjust to new long-term trends.
The fact that foot traffic is growing is good news for many retailers, particularly those dependent on local customers. But those brick-and-mortar retailers still face the ongoing challenges of adequate staffing and keeping up with product demand. Managing these variables while simultaneously working to make the consumer’s shopping experience as convenient and pleasant as possible should be the top priorities for the coming year.
For e-commerce vendors, 2022 will be about fulfillment speed and making the consumer’s online shopping experience as simple and frictionless as possible. That means making it easier for them to find exactly what they want, letting them pay for it using the most up-to-date means, and then getting it to their door as quickly as you can. If possible, combine your online and physical operations with cross-over marketing, discounts, and order fulfillment.
