Retail Trends Lead the Way for Wholesale In Multichannel Commerce
Over the past decade or so, retail trends have been dominated by talk of the Internet. Indeed, eCommerce has irrevocably transformed the way we buy, and many have predicted that the retail store would soon become obsolete. Retailers, however, have found that an approach prioritizing both digital and physical channels will outperform competitors that stick with one or the other. While retail is leading this trend, wholesale is not far behind.
The End of The Brick & Mortar Retail?
Brick and mortar retailers have long been challenged by the convenience and couch-potato-appeal of eCommerce. Buyers enjoy lower prices, cheap (or free) shipping, and more choice and availability. What’s not to love? Onlookers, meanwhile, have declared the brick & mortar store to be on the precipice of extinction at the hands of these online megastores. While many have portended the impending demise brick and mortar, however, such omens have been very much exaggerated. There is little doubt that digital technology is forever changing the business of retail. Consumer habits with regard to finding, evaluating, choosing, and receiving goods are very different than what they were in the days before the Internet existed. But while more transactions are occurring online, this does not spell disaster for brick and mortar retail. In fact, it may spell success.
Maturing Retail Trends
According to Harvard Business Review (HBR), brick and mortar retailers today control 94-97% of all retail sales. That’s an enormous margin, and it’s an indication that the stores we’ve all shopped in at one time or another are choosing to adapt, rather than retreat. HBR reports that many “large store-based retailers...are growing their eCommerce sales even faster than Amazon.” While this trend has hit the world stage among large, national chains, they’re just as relevant for small independent retailers. Research firm Forrester has reported that 73% of consumers would buy from local retailers if they could go online to see a product’s availability in the store. Brick and mortar, after all, has the advantage of allowing people to go out and buy a product now, as opposed to waiting for it to arrive in the mail. Indeed, the line between an in-store sale and an online sale is blurry and often crossed. Consumers can choose to buy online and pick up in store. They can do in-store returns of products they purchased on the website, or order an out-of-stock garment right from the store’s fitting room. They might use the store as a kind of “showroom” and then buy the product online, or vice versa (say a consumer is interested by a sweater they see online, but goes into the store to try it on before purchasing, for instance). It would appear that retailers who focus on an omnichannel (there’s that word again) strategy are those who will come out on top. These are retailers who seamlessly integrate both the digital and physical spheres of their business. According to HBR, “for omnichannel retailers, websites and mobile apps are not just eCommerce ordering vehicles, they are front doors to the stores....stores don’t necessarily need as much foot traffic as they have had in the past to succeed.” Thus, while some stores may indeed be closing their doors in the face of the eCommerce phenomenon, the stores that remain are operating more productively in tandem with online channels. According to Mike Moriarty of A.T. Kearney, “Stores are increasingly engaged in ‘guideposting’—they don’t care if customers touch everything in the store and then order online, as long as they order from that store’s website.” Turning the traditional shift from brick and mortar to eCommerce on its head, there are also companies like Warby Parker and Birchbox who’ve built their brand online and then opened physical stores, demonstrating the power and influence of the in-person interaction between a consumer and a brand in making a purchase decision.
A Wholesale Comparison
These trends go beyond retail. A similar shift is happening in many other industries, including wholesale. Says HBR, “digital technologies are transforming physical businesses rather than annihilating them. Indeed, the fusion of digital and physical innovations...creates opportunities that most businesses have barely begun to tap.” Many wholesale sales are made in a physical face-to-face meeting between a buyer and sales rep. Reps get out on the road to visit customers and write orders. More and more, however, wholesale businesses are seeing the advantages of also providing eCommerce channels for their buyers. Like end consumers, retail buyers are looking for the convenience of going online to get answers to simple product questions, scope out new product lines and order merchandise. Giving them more choice in where to initiate a transaction can only result in increased productivity and more sales. Just as physical and digital channels mesh and work together in retail, it’s important for wholesalers to look at this development as building on their physical sales channels, rather than eliminating them. At the end of the day, relationship selling remains an important part of the mix. There’s nothing that can take away from the the face-to-face, personalized experience of talking to a sales rep about a product. Those sales reps are still going to be your buyers’ strongest conduits to your brand, and it’s time to figure out how these different channels will work together to give them a better experience. What are your thoughts on these retail trends, and the wholesale comparisons we’ve drawn here? We’d love to hear from you in the comments.