Many would agree the rise of e-commerce has reshaped the retail landscape. It has provided consumers with the convenience of shopping anytime, anywhere, while also generally offering a wider range of products than what shoppers can find locally.4 However, the emergence of e-commerce has also affected traditional brick-and-mortar retail locations, both positively and negatively.4
How e-commerce helps physical retail locations
Webrooming: This refers to the practice of researching products online before buying them in a physical store1. With e-commerce, customers have the advantage of gathering detailed product information, checking customer reviews, and comparing prices. They might then visit physical stores to inspect the product quality, try out the item, and possibly make a purchase.
“Click-and-Collect” services: E-commerce has given rise to “Click-and-Collect” services where customers order products online and pick them up in a physical store2. This often saves shipping costs for consumers while also increasing foot traffic to brick-and-mortar stores, possibly leading to additional in-store purchases.
Showrooming: Some online retailers use physical stores as a "showroom" for their products1. In this model, customers visit the physical store to touch, feel, and try products before potentially purchasing them online. This may strengthen the relationship between online and offline channels, possibly improving customer experience.1
Brand awareness: A well-integrated e-commerce platform can enhance a retailer's brand presence, both online and offline.8 The increased visibility may drive customers to physical stores, particularly if the retailer hosts exclusive in-store events or offers4.
How e-commerce hurts physical retail locations
Reduced foot traffic: With the convenience and wide product range offered by e-commerce, fewer consumers are visiting physical stores for routine shopping. This has led to decreased foot traffic in many traditional retail stores5.
Retail space downsizing: As more business is conducted online, some retailers are reducing their physical footprint to cut costs. This trend is particularly noticeable in sectors like books, music, electronics, and apparel6.
Price competition: Online retailers often operate at lower costs than physical stores, enabling them to offer competitive pricing. This usually puts pressure on brick-and-mortar retailers to match these prices, often at the expense of their profit margins7.
While e-commerce has introduced certain challenges for brick-and-mortar retail, it also offers opportunities for synergy and growth. An integrated omnichannel strategy where online and offline channels complement each other may deliver a superior customer experience.8
1 https://www.wired.com/insights/2014/09/webrooming/
2 https://www2.deloitte.com/us/en/insights/industry/retail-distribution/future-of-retail-renaissance-apocalypse.html
3 https://www.shopify.com/retail/showrooming-webrooming
4 https://www.mckinsey.com/capabilities/growth-marketing-and-sales/our-insights/the-great-consumer-shift-ten-charts-that-show-how-us-shopping-behavior-is-changing
5 https://techcrunch.com/2020/05/12/us-e-commerce-sales-jump-49-in-april-led-by-online-grocery/
6 https://www.forbes.com/sites/pamdanziger/2019/04/10/retail-downsizing-will-accelerate-as-75000-stores-will-be-forced-to-close-by-2026/?sh=38928674339e
7 https://www.brookings.edu/research/are-online-prices-higher-because-of-pricing-algorithms/
8 https://www.colliers.com/en/news/how-e-commerce-supports-the-need-for-brick-and-mortar
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