Brick Renaissance
The period just before the outbreak of the pandemic was a period of "retail apocalypse" - many big retail brands closed their stores in large numbers. Bankruptcies of several large traditional retailers (JCPenney, MUJI, etc.) were also part of this period. Many question marks hung over the brick-and-mortar stores.
On the other hand, as far as eCommerce is concerned, data from the IBM Retail Index in 2020 showed that the pandemic caused a jump in its development (approximately five years). On this basis, the downward trend in brick-and-mortar stores could be expected to continue.
However, the opposite is true and brick-and-mortar retail is experiencing a renaissance.
The year 2021 was a turning point - the number of newly opened stores, after several years, exceeded the number of closed stores (despite two years of unprecedentedly strong e-commerce).
In addition, brick-and-mortar stores are not only opened by "traditional" retailers, but also by retailers that have emerged in the Internet environment. Many activities in this direction were made by Amazon (Amazon Go, Wholefoods Network Purchase, brick-and-mortar Bookstores, etc.) but also by several major DTC (direct-to-consumer) brands - Allbirds, Warby Parker, Glossier. Example from Slovakia: Dedoles. The motivation behind this trend is multi-layered. Purely anthropologically - customers spend much of their lives in the real world, and not developing relationships with them also in this dimension means being less competitive, because some aspects of brick-and-mortar stores (especially sensual experience and consultative personal approach) cannot be replicated online. In other words, physical stores increase brand value.
However, the reasons are also economic - it is a proven fact that physical stores play a role in increasing sales, although this can happen online. As fewer and fewer transactions take place in physical stores, the media role of brick-and-mortar stores is becoming more and more important ("Store is media", says retail futurologist, Doug Stephens). Stores are a medium: large billboards, through which the trader communicates his brand through various experiences (interactions with goods, staff, and the space itself). A successful brick-and-mortar strategy then leads to higher sales and lower customer acquisition costs.
New challenges
At the same time, customers' expectations about what the store should provide them have changed significantly over the last 10-20 years. Whereas in the past, shops used to be showcases and places of purchase, today (in addition to these activities) ordinary shoppers want to carry out other activities to a greater extent - consulting, discovering new products, testing them, returning goods, picking up goods ordered online, etc. A shift in customer comfort expectations is also important - customers transfer expectations from the online world to the offline world. What was once tolerable (long lines, missing goods, insufficient information, etc.) is now tolerated at best, and the retailer who can eliminate these shortcomings of the brick-and-mortar world wins.
Moreover, at a time when competition is one click away, it is becoming increasingly important to differentiate. Therefore, even with a perfect customer experience, the possibility of picking up goods purchased online and the like may not be enough. (For example, the American network Dick’s Sporting Goods opens shops with community centers, external running tracks, etc.) On the one hand, the huge growth of eCommerce and on the other hand the appetite of eCommerce players for offline space made traditional brick-and-mortar retailers understand the importance of their physical networks. At the same time, however, even the most traditional retailers must invest and innovate in their networks if they want to remain relevant to competitors from far more agile competitors. And at an unprecedented pace.
Online retailers who open offline stores bring their online habits, management practices, techniques, and technologies to this world. They do not have much experience with brick-and-mortar retail, but they learn quickly. Traditional retailers have to catch up with digital handicaps - creating/acquiring digital innovation teams, hubs, etc. The shift from the transactional to the media role of the store means a new way of managing. Store performance can no longer be measured (only) by traditional metrics such as sales per square meter and the like. If the unit of performance is an experience or interaction with staff, it is necessary to reach for new approaches to its management.
New customer expectations regarding the convenience and uniqueness of the customer experience (acquired through living in the online world) require their fulfillment in the online world - examples: self-service payments, BOPIS ("buy online pick up in store"), interactive digital elements (tablets, kiosks, displays ), immersive environment, events, community facilities, etc.
Conclusion
The future of brick-and-mortar retail is bright. At the same time, it will be different from its past.