Think online stores are the dominant form of retail today? A new study suggests you may want to think again. According to the Commonwealth Bank Retail Insights Report, more online retail businesses are building physical stores — because it’s actually not online stores or physical storefronts picking up speed, but businesses who do both in an omnichannel effort.
According to the report, 18 percent of internet-based retailers plan to open a physical storefront in the next year. That will mean that over 75 percent of retailers still have a physical location for customers to visit.
Even businesses with a large online presence are picking up on the trend — Amazon, for example, is opening several physical locations around the U.S.
So why are successful online businesses like Amazon opening physical storefronts? The omnichannel shopping experience combines the best of both worlds, mixing the ease of online shopping with the ability to actually see products in person.
“Brick and mortar and multi-channel retailers are doing more as customer preferences evolve,” said Jerry Macey, the national retail manager for Commonwealth Bank. “At the same time, emboldened digital retailers are opening physical stores to complement and drive further online sales.”
At the same time, online sales are expected to rise this year. According to the report, retailers estimate an average of 24 percent growth in web-based sales in the next year. About 35 percent of those will come from customers shopping with a smartphone, the report says. To keep up with that trend, almost half of retailers are expecting to increase their technology budgets. Next to technology, retailers plan to spend more on loyalty programs and social media expansion. Many businesses are also planning to expand their efforts to create a personalized customer experience, the report indicates.
For the businesses predicting a fall in sales, 95 percent of them attribute the estimated decline to the economy, not business practices.
The study also shows that 38 percent of sales are generated online, which means physical retail stores still have a pretty significant pull.
So what does all that data mean for creative businesses like photographers, graphic artists and printers? While physical locations still sell the most, many customers are looking for the convenience of shopping with a businesses that utilizes both channels. Picking out prints may be more convenient online, but picking prints up in person rather than pay the shipping fees may be more ideal for some customers, for example.
While online presence is important, physical stores continue to have the most pull. Omnichannel businesses successfully pull off both operations — and several online retailers are making the move by adding physical locations in hopes the storefront will also boost online sales. According to the latest study by the Commonwealth Bank, omnichannel seems to be an ideal way for many businesses to expand.