The arrival of C-19 has changed many aspects of markets. We see a staggering shift in the online market as compared with the offline market. More and more sellers are shifting towards online selling. Not only C-19 but the profitable growth of the e-commerce industry is also a reason why every one out of three store owners is an online seller. Due to these factors, the purchase and selling behavior has been altered.
Now speculations are pumping for the existence of brick and mortar stores. These observations are majorly by sellers who have noticed a pattern of sales linked with consumer behavior. Convenience, trends, variety, cost, and marketing are the derived behavioral factors of a consumer. These factors have a direct influence on the sales graph.
Even if we overlook the statement of diminishing offline stores, we cannot deny the numbers. According to Forrester, retail sales decreased by US$ 2.1 trillion in 2020. On the other hand, US e-commerce sales are increasing by 31.8 percent every quarter. After looking at the numbers, it seems that the offline stores would take five years to cover up the losses. Among other challenges, one would be the cost of catching up in these years. Sellers may have to spend extra dollars to attract customers and make their offline presence worthy and attractive. It is easy to read but hard to implement.
With a good understanding of the current picture, one can easily speculate about how the world will look with only 5% of offline stores remaining.
Does that mean, in 2030, will there be no offline market?
Well, no one can comment on that! But one thing we can do is to look for the current and future status of one-stops and mom-and-pop. In this blog, today, we will be discussing the decline of our conventional outlets and future possibilities for offline trade.
The Apparent Decline
Companies and retailers currently debate the profit and loss associated with the offline store, but some corporations have completely shifted their operations online and never looked back. Many among these were the prey of forecasters. One forecast was by TechCrunch, which suggested that brick and mortar retail sales would fall by 14%. This one-fourth drop in sales is equivalent to $4.1844 trillion in revenue. The decline hasn’t been the same for many retailers. Some have partly shifted their operations online. Alternatively, some sellers became a part of the e-commerce seller community with only warehouses and manufacturing plants present.
There’s still a chunk left behind with physical stores because of the nature of the business or they were unable to make this decision.
Speaking of the nature of a business, we have seen certain sellers whose product type and current demand just couldn’t match.
During the pandemic, when it became impossible to visit stores, clothing faced a huge loss. According to the Stock app’s data, men’s clothing went through a significant loss of -68.27%. Likewise, women’s clothing went down by -50.25%. And now, apparel and accessories are the second-largest markets in the e-commerce industry.
The worst is yet to come when the post-pandemic effects will get noticeable by December 2022. Following the C-19 protocols, the physical visits will adhere to a minimum. Pharmacy and grocery stores will be the only ones still operating in this scenario, as they have a strong foothold in the offline market.
As the waves have passed by, many merchants have tried to lure customers. But with the level of marketing e-commerce carries, it is difficult to replicate the same offline, particularly when the operation cost is high. Another point is that sellers are unable to bear the cost associated with offline stores. That adds to the liability, especially when there are no sales. Sales are declining for one more reason. People have now caught a tendency to compare everything online. Even if the offline store opens with sufficient capacity, consumers hunt for the best prices online as a comparison. Because they are direct sellers, the online retailer’s price is most of the time 10% less.
These high levels of risks have caused vendors to shift, which is harming offline stores. These aren’t yet wiped out. But if we think ahead, the future of this model of business seems to be blurry.
Perspectives for the Future
The market for offline stores has decreased in size and profits. Despite a significant change in retail market share, one-stop stores continue to be popular among some customers. Soon, the trend will shift back in favor of conventional shopping. With ice-breaking technology and strategies, merchants are redefining the future of offline stores.
Every seller understood the buying patterns of recent times. The sellers now recognize that a customer will prefer the touch and feel of a product in the end. Shoppers will be tired of online shopping, so merchants will focus on ensuring convenience. Providing them with a savvy and digital experience will ease their experience. In addition, smart check-ins and checkouts will control the crowd. With the help of virtual assistance, offline and online experiences will integrate. As the guide for the user with variety and best prices, a user can enjoy the ambiance and affordability in a store. Additionally, installing an in-store tech landscape will offer a user detailed information about every product through their smartphone when they move around the store.
Another play could be “customization.” However, it may require a lot of AI, information tracking, and machine learning but it will give a level-up personalized experience. This technology is in talks where it will fetch the buying history and details of a user. Think about walking into a store where the VA remembers your name when you arrive. That’s one smart step to increase loyalty by giving a personalized experience.
A product’s type determines its sales. Previously, we outlined the trend where the offline apparel market has been crushed. Meanwhile, certain products are independent of their nature and do not suffer as much from e-commerce. Automobiles, gadgets, repairs, alcohol, and construction substances cannot be browsed and bought through an app. Therefore, even in 2030, products akin to these would have a specific set of customers and demands. Thus a seller going for an offline store will have an understanding of the product’s nature first.
In tandem with smart supply chains, AI and predictive demand will work. These supply systems will enable a seller to never run out of a product. This predictive demand forecast will keep track of sales data and control the inventory flow and stocking within the store. These deeply integrated systems will ensure a customer gets more variety than an online store.
Reviving the Offline!
The economic growth of a country is dependent on brick-and-mortar retail. Thus, this market can never be dead. These mercantile and retail giants, whose business model largely relies on this conventional model, prepare to strive for a revolution.
A seller today knows that shoppers are tired of receiving marketing emails and shopping pop-ups. They even miss the ambiance and a desire to hang out just while shopping. These are behavioral observations. In the future, sellers will integrate their stores with more personalization, including filters and customized choices similar to online stores.
Through chatbots and user-generated content, a seller can keep customers updated. Consequently, this will decrease the time spent in long queues and checkouts. This feature is similar to the Phygital model where customers experience both store models.
These omnichannel approaches will provide sellers with an edge as they will extend their business beyond four alls. Shoppers will find their way directly to their products within no time.
In 2030, while staples shall remain a requirement, retailers will continue to prove their existence. One challenge that will remain ahead of them will be e-commerce. In the future, it will be interesting to see whether our predictions win or if economists’ predictions turn out to be accurate.
As the market is demanding relevance, reliability, and recline for shoppers, sellers are becoming intelligent. It is about the moment when a retailer spots an opportunity and pounces on it. Amazon went the same way when it started settling into the physical market with ‘Amazon Go’. Hence, the marketers and sellers need to get started today with the best anticipation for tomorrow. A uniform research plan and sales strategy will help to dominate every market.
Ergode goes the same way. We use tech ideas and solutions to change the online and offline market to accelerate growth. We have a knack for anticipating demand and sensing market opportunities to serve our brands and retailers better. Get in touch with our team if you are seeking a turnaround in your business.