November 29, 2018

Technology will save brick-and-mortar. Yes, you read that right.

Bargain hunters frantically push and shove, elbows poised, ready to wrestle any opponent. For most of us, the idea of a jam-packed department store during shopping madness like Black Friday is as appealing as a visit to the dentist.

Isn’t it so much easier to shop for products your heart desires from the comfort of your couch? Millions would agree with you. For years, apocalyptic headlines have proclaimed the death of traditional stores now that e-commerce is king. But hold on, that’s not actually the case. This holiday season, brick-and-mortar retailers are feeling the love.

According to an AlixPartners survey, 68% of consumers in Germany plan on doing most of their festive shopping in-store, compared to 67% in the US. Yet, even when shopping in-store, 75% of German consumers use the internet to research which products to buy and at what price.

But there’s a twist. Retailers can’t keep customers with the same old, boring strategy. That’s why some brands and malls around the globe have shuttered their stores. In order to survive, retailers have to embrace technology, must engage consumers, identify their unique needs and enhance the omnichannel experience.

Take China’s e-commerce titan Alibaba, for example. It set a record of $1 billion in sales within the first 85 seconds of its Singles Day event in November. In the span of a day, it racked up a staggering $30.8 billion in sales. But at the same time, Alibaba has opened 65 retail stores over the past year. For its online-offline merger, it tests features like facial-recognition payment and even robot restaurants.

Black Friday, which was created by the American retail industry, kicked off this year’s holiday shopping season. It’s a big deal in Europe, too. A study by mydealz.de found that 62.3% of Germans are hunting for bargains on that day. The German Retail Association predicts that sales during the Black Friday weekend have climbed to €2.4 billion. Meanwhile, this year’s Cyber Monday was the biggest online shopping day in US history, generating a whopping $7.9 billion in sales.

Now, brands are bridging the gap between the online and offline world. The new experience economy comes in many shapes and sizes, like virtual and augmented reality, 3D holograms, smart mirrors, pop-up stores or special events. The social media heavyweight Facebook has opened pop-up stores across the US this month in partnership with the retailer Macy’s, where shoppers can browse goods from 100 small business and online brands. Even the German edition of the fashion magazine Vogue opened a pop-up near Stuttgart to showcase emerging German designer labels.

The shopping revolution is clearly in full swing. Especially the Amazonization has turned the retail world upside down. The US has the highest penetration in Amazon Prime memberships (68%), followed by Germany (45%) and the UK (42%). But even the e-commerce giant is moving into physical spaces. At its pop-up shop in Berlin, new products are on display for the Christmas season and shoppers can try out workshops. Amazon has also opened bookstores and a 4-star store in New York City to highlight its best-rated merchandise.

The men’s clothing store Acustom Apparel in New York City uses 3D technology and a bespoke algorithm to digitally tailor suits that perfectly fit a customer’s body. Does robots cruising through stores seem futuristic to you? It’s a reality in Target stores in the US already, where the robot Tally by Simbe Robotics uses data analytics, AI and image recognition. Or take the beauty chain Sephora, which offers makeup tutorials.

So does the following tidbit really come as a surprise? In the era of e-commerce, physical store sales still make for 90% of the $4.7 trillion total retail sales in the US, according to the Department of Commerce. Besides being able to touch, test or try on products, shopping in store also provides instant gratification.

But in the age of digital consumerism and social media, customers are not just looking for products, but an experience. Marketers have to come up with exciting and innovative concepts that provide a marketing and branding boost. Both clicks and bricks are the future.

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