In the past, the only way consumers were able to buy products was through physical distribution channel, hence the typical strategies to meet the customer needs were primarily focused on opening more locations or increasing the hours and days of operation (think Sunday shopping and 24-hour stores in the past decade).
Much has changed since the advent of the Internet, and today’s retailers must go beyond relying on dangling the carrot, better defined by loyalty programs, in order to drive sales through their virtual and physical stores. The evolution of customer engagement has resulted in the need for retailers to create “stickiness” for their branded experiences, irrespective of whether it’s online, mobile or in their network of stores.
Based on a study by CBRE, retail stores are not going away anytime soon. The global retail study found that internationally, 79% of consumers still visit a physical store to buy a product, so the store still plays the key role in the overall shopping journey. My recent visit to The Dubai Mall demonstrated how the power of physical stores remains strong as I waded among thousands of customers (and yes, the majority were carrying shopping bags).
Although these consumers come with an extensive arsenal of digital tools such as mobile price comparison, social media ratings and online shopping, the store remains an integral link in how customers buy products. A testament to the importance of physical stores is the recent decision by China’s Alibaba Group, one of the world’s largest Internet retailers, to globally acquire a 26% stake in Intime Retail (Group) Co., the Hong Kong listed operator of predominantly luxury oriented department stores. This mirrors Amazon’s recent move to expand its physical presence through a network of warehouses and distribution centres, aiming to make the online more convenient for consumers.