The Value of Brick-and-Mortar in an Online World

Last week I was searching for e-commerce versus brick-and-mortar statistics. Depending upon the source, brick-and-mortar retail is either thriving, making a comeback or dead and buried. Wading through the bias and hype, I found several white papers from reputable sources in our agency library.

Based on metrics from the US Government, in Q2 2016, US e-commerce sales represented approximately 8% of total retail sales. And, according to several national retail analysts, over 55% of shoppers would prefer to buy from a merchant with a physical store presence. Among younger consumers, 80% of Gen Z and 82% of Millennials prefer a brick-and-mortar experience to online shopping.

So, brick-and-mortar is still a viable channel in the purchase process, but does it provide any consumer insights in addition to the revenue stream? The value of digital in an omni-channel environment is fairly transparent. Digital provides a steady source of data and insights that refine and enhance the shopping experience. But, what does brick-and-mortar bring to the data table? Quite a lot, actually.

First, brick-and-mortar locations enhance 1:1 targeting and ROI. Every brand has a trade area. This trade area is where a brand’s best responding customers and prospects reside. Brick-and-mortar locations anchor these trade areas, providing a strong geographic center. Targeting the top traffic-driving zip codes that surround a brick-and-mortar location can double or triple 1:1 response.

Second, brick-and-mortar visits are stronger predictors of loyalty. Online visits are great for measuring the potential success of a retail site, but a true brand interaction can only happen in store. The ability to touch and feel a product while having a detailed conversation with a knowledgeable brand representative increases conversion and satisfaction rates, which are key metrics in predicting customer retention.

Third, brick-and-mortar locations are better at driving net revenue per visit. Online returns are usually handled via free shipping and a return box. There is little to no interaction with the brand after the product is sealed and mailed. But, in a brick-and-mortar environment, returns provide an opportunity to cross or up-sell a customer along with creating a positive brand experience. Within the group of retailers that I’ve worked with over the years, over 40% of returns resulted in net increase in revenue within the same visit.