Myth or Truth: Is Brick & Mortar Actually Dying?

In 2022, in-demand retailers and consumer packaged goods (CPG) brands will invest in stores while others will pare down their physical presence. Let’s examine the factors fueling stores’ simultaneous expansion and contraction to see where global retail leaders will invest resources and why.

Stores are still very much alive

Consumers still love to see what’s in store. A whopping 80.4% of total retail sales still take place in physical stores, as brick and mortar offers:

• Multisensory experiences
• Immediate access to products
• Opportunities to test product quality and fit
• Human touch that builds relationships and trust
• Showrooms that drive product discovery
• Easy returns
• An escape from our pandemic cocoons.

Some stores seem pandemic-proof. Walmart’s buy online pick up in-store (BOPIS) service earns one in four dollars spent on click and collect. Target keeps investing in its stores, including shop-in-shop partnerships. Lululemon enthusiasts motivated the retailer to open dozens of new stores last year.

As inflation fuels value shopping, retailers that target price-conscious consumers are betting big on brick and mortar.  Dollar General plans to open 1,100 new locations and remodel 1,750 stores this year.^, Off-price retailers TJX and Ross plan to open more stores, as does German grocery discounter Aldi.^,

Demographics matter, as rural Americans are more likely to shop in stores due to lower levels of technology ownership and broadband adoption than urban and suburban consumers, widening the digital divide. While 87% of Boomers prefer to shop in physical stores, consumers aged 65 and up are the fastest-growing group of online shoppers, spending 49% more year-over-year online in 2020.^,

Shifting habits eroded store counts

Underperforming retailers and tech laggards have been at risk for years, as this timeline of U.S. store closures shows.^,

In recent years, the comparative convenience of e-commerce made stores seem quaint. In 2020, e-commerce accounted for 19.6% of total U.S. retail sales, nearly double the 2015 figure of 10.7%. The mall is now digital, and consumers discover new products and brands on retailers’ websites, online marketplaces (Amazon, Etsy, and Shopify), and social media (Instagram, Facebook, and TikTok).

Innovations keep shaking up CPG. Gorillas, Gopuff, and JOKR deliver products in as few as 10 minutes, making it more enticing to skip the store. Retailers like Sephora and Ulta give online shoppers greater certainty about what they’re buying with personalized virtual try-ons, as does Amazon Fashion with its Made For You service for customized clothing.^,

In response, 67% of Millennials and 56% of Gen Xers prefer to shop online. Even after vaccinations, Baby Boomers are the least likely to go in-store more often than other generations at 54%, compared to Gen X (39%), Millennials (44%) and Gen Z (40%).

As consumption shifts, retailers like Bed Bath & Beyond, CVS Health, and Macy’s will close some stores this year as they adjust their strategies.^,

Global retail’s future is omnichannel

Since increasingly tech-savvy consumers still love stores, retailers are racing to implement robust omnichannel strategies. Omnichannel shoppers spend more: 4% more every time they visit a store and 10% more online, on average, compared to single-channel shoppers.

Stores keep evolving to support e-commerce with BOPIS and curbside pickup. Also, in-store tech boosts convenience such as: 

• Amazon’s Just Walk Out technology serves Amazon Go, Amazon Fresh, Whole Foods, and Starbucks, plus Sainsbury’s stores in the U.K.^,,
• Tesco, Aldi, and Carrefour announced checkout-free stores in London, Paris, and Dubai^,,,
• Żabka Group, a Polish convenience giant, opened checkout-free stores in Europe.

Meanwhile, e-commerce players are getting physical:

• Amazon plans to open Amazon Style clothing stores, department stores and Amazon Fresh, plus Amazon 4-Star, Amazon Salon, and Amazon Fresh in the U.K.^,,,,,
• Warby Parker and Allbirds expanded their physical presence during the pandemic.^,
• Online razor brand Billie will sell its products through Walmart stores.
• Shopify also hints at brick-and-mortar ambitions, filing a patent for sensors that measure in-store traffic.

Stores are staying – if they’re agile

Monitoring consumers’ omnichannel habits and competitors’ moves can guide retail companies’ physical and digital efforts in 2022. Maximizing omnichannel options keeps companies visible wherever shoppers spend their time, plus offering an agile and unified experience promotes a seamless service to grow sales and market share.

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