And it is true, that a lot of businesses are going out of business, because Amazon (and other’s like it), satisfy their customers’ needs better than they do. On the other hand, however, a lot of brick-and-mortar stores are thriving because the physical store excels at delivering something, that digital just cannot copy: serendipity and ambience.
How often have you stepped into a store and surprised yourself by finding and buying something, you didn’t even know you wanted or needed? This doesn’t refer to impulse purchases (like candy at the checkout), but genuinely finding something you didn’t even know existed? Like an exotic fruit or a pair of funny socks?
In some ways physical retail is like a physical magazine. Reading a magazine on an iPad is fine, but digitally you don’t happen onto articles. You have to choose them. You tend not to read what doesn’t seem interesting from the table of contents. Reading a physical magazine, however, you often just randomly pick your way through, reading articles that you would never happen onto, if you had to actively choose it instead of happening to look at it.
The experience of both buying things and reading things are completely different from online to offline. However, dismissing the offline experience as old fashioned, is shortsighted. A physical store can be provide feeling and individuality that an online experience cannot. However, this means looking at the physical experience not as an alternative to online, but rather as fundamentally different, where the value created is not in a more expensive transaction, but in a service.
Effective retail environments don’t try to compete with online sales for generic products. But offer an inherently fuller customer experience centred around service and ambience. As Steve Dennis pointed out in Forbes magazine, “physical retail isn’t dead. Boring retail is.”
To understand what matters to your customers (ie, understanding what is boring), you need to consider that customer behaviour is based on three factors: time, place and motivation.
Obviously, if it is very important then they’ll be willing to spend the time and travel to get it. If it isn’t important, then they won’t take a step out of their way nor invest more than a second. Understanding customers in this context allows you map their customer journey from need to satisfaction, and where you fit into their life. Retail can only go two ways in today’s online environment: down market to be cheapest and physically closest or up market to be best. The middle ground, where you’re selling stuff to customers that just want stuff, but don’t care where they get it, belongs to online stores.
The other obvious extension of the above logic is, that there is room for services in retail environments, that didn’t use to be there before. Grocery stores that offer you a glass of Pinot Grigio while you peruse the legumes may not be everyone’s idea of a good time, but neither is it danger of being usurped by an online competitor. Finding opportunities for “symbiotic multi-tasking,” for lack of a better expression, offers physical retail environments means to extending their competitive advantage over online stores that sell the same physical product, but cannot offer a feeling to go along with it.
At the end of the day, it will be the customer experience that makes the difference. If the best a store can offer is the same as the competition, but with a different colour scheme, then beware that this store will be disrupted. But if there is a reason to visit it again and again, for something beyond the just the products on sale, you can rest reasonably assured, that it will stay in business and thrive, not matter what happens online.*