Main Street stores’ rough ride over the pandemic won’t magically go away as lockdowns lift, new research from Shopify indicates. A lot depends on whether brick-and-mortar stores can adapt to a new retail reality that was underway for years, but hastened by the coronavirus.
A Shopify-commissioned study — conducted by The Angus Reid Group in April — found that, while brick-and-mortar retailers flocked to online selling, they found that the scenario puts them head-to-head with major online marketplaces. And many have struggled, with 82 percent of local American retailers agreeing that major online marketplaces are making it more difficult to run their businesses and 41 percent saying they’re having a hard time competing.
“Of those, three in five (59 percent) say they may be forced to close their business within the next 24 months,” according to the report. It laid out one of the key issues for these stores: They tend to underestimate factors that discourage people from buying.
For instance, as many as 38 percent of U.S. consumers report that not knowing product availability stops them from visiting an establishment, while only 19 percent of stores recognized that as an obstacle.
That conundrum isn’t necessarily new, but the pandemic has added new layers of complication. For instance, driven by fears about COVID-19, 21 percent of consumers shy away from in-person interactions.
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Omnichannel can easily solve these issues, Shopify noted, referring to a mode of tech-fueled operation that sees online and offline retail as one business, rather than two distinct areas. Tech tools allow people to check inventory and buy from anywhere, whether on the premises, on a website or on social channels.
The company called them “new levers to pull” for physical stores. “The idea of selling in only one way is outdated: commerce is changing too fast for that to remain true, physical retail space included,” Shopify wrote. “From staff to space to sales channels, retailers need to get comfortable staying nimble — and technology is the key.”
The platform introduced a Shop Pay Installments feature, a “buy now, pay later” offering birthed from its partnership with Affirm, and it’s been expanding ways to highlight local merchants in its Shop app. And in a roundtable hosted by Shopify on Wednesday, it took a strategic look at how the nature of selling has evolved.
During the talk, Rothy’s explained the dynamic between its online and physical operations. “We build stores to serve the communities our customers are in,” said Heather Howard, Rothy’s chief operating officer. “Our shoes are made from recycled plastic bottles, and the brick-and-mortar stores let us tell our brand story and lets the customer touch and feel the product.”
Indeed, the on-the-ground transformation of shopping has retailers seeing value in their physical locations as showrooms or fulfillment centers, where customers can do things like buy online and pick up in store, a consumer behavior that exploded over the course of the pandemic.
The past year has created another intriguing set of circumstances, as inventory for commercial rentals has swelled.
“Rents are a little lower and landlords are willing to be a little more flexible,” noted Arpan Podduturi, director of product, retail, at Shopify. “There are more fluid opportunities. Retailers are now measuring the ROI of brick-and-mortar stores not just by sales per square foot, but by omnichannel sales.”
The retail revival on Main Street will likely hinge on a number of factors, but anticipation runs high. Seventy percent of local retailers expect the vaccine rollout to have a positive impact on their business, while 72 percent of U.S. consumers say they want to support small businesses. As many as 69 percent of local merchants believe that consumers will shop more in-store once COVID-19 is no longer a threat.
That may be true, but stores have to be smart and flexible, Shopify urged. And they need to understand that, when it comes to physical retail, things may never completely go back to the way things were.
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