Will e-commerce end up killing traditional brick-and-mortar stores?

This question continues to haunt observers of the retail scene. In recent years, many familiar retail banners have disappeared, while online shopping has grown by leaps and bounds from one year to the next. One can only wonder what the future holds for us on this front.

Nonetheless, when we survey people about their preferences, we find it very interesting that, despite everything, the vast majority of consumers still prefer to shop in-store!

Indeed, the answers to the following question are very eloquent in this regard ...


Even when we offered them the choice of using the store to get a better feel for a product, then ordering exactly what they want online and having it delivered to their home, the full in-store experience is by far the most preferred. This certainly suggests that storefront merchants still have potential!

The inevitable growth of online shopping in the coming years

It is also interesting to note that these results are relatively constant across almost all subgroups of society, starting with the regions and provinces (no significant difference in Quebec or in the other provinces). On the other hand, big age-related differences show up.

Young people under 35 are by far the most enthusiastic online shoppers. While 19% of consumers overall prefer this mode of shopping, this proportion hits 30% among Millennials. However, a majority still prefer to shop in-store (55% of those under 35 years of age and 68% of the general Canadian population). Note that the proportion of consumers preferring in-store shopping rises to 80% for those aged 55 and over.

Consequently, if we project this data into the future, when the younger generations will become increasingly dominant in consumer markets, and factor in the continuous rise in online stores, we can be fairly certain that online shopping will rise significantly in the coming years.

The survival of the brick-and-mortar storefront

Even though we find a clear preference for in-store shopping, the proliferation of online stores is significantly eroding the market share and sales of traditional brick-and-mortar stores. In many cases, their very survival is at stake and the downward trend will only continue. More closures and exits from the marketplace can be expected.

In light of all this, retail businesses have no choice but transform their business models and the customer experience. Otherwise, they will perish. The status quo is no longer an option.

However, not everyone will go out of business. The success of their transformation will depend on how well they are able to incorporate into their storefront operations the lessons learned thus far from e-commerce and technology.

First, it is clear that merchants today must have an online distribution channel. Even for consumers who prefer to shop in physical stores, e-commerce is a necessity for reasons of convenience, speed, product availability and sometimes price.

The winning in-store combination will be the one offering an optimal mix of approaches combining high touch, where we can see, touch and try on products, AND technological interfaces that enrich the customer experience. This will help boost customer loyalty and the value of the brand.

There are many tech options available today that can enrich the in-store experience. Virtual shelves using tablets (iPad, Galaxy, etc.) can showcase an entire product line, along with complete information about each one. Real-time access to product reviews can help consumers make informed choices based on their purchase criteria, and so on. The possibilities are becoming more and more numerous and affordable.

Merchants need to adjust to the "journey" that customers are now taking before they make their final purchasing decision (web research, product comparisons, need considerations, etc.). Fortunately, they have an opportunity to facilitate this journey in-store.

Personalization to the rescue

Of all the tech possibility, the most promising for retail businesses is undoubtedly personalization (an area in which CROP is active, if you will forgive the plug!) This relatively new discipline lets merchants provide a unique experience, perfectly customized to each customer's individual needs by offering, in real time, a personalized assortment of products, promotions, experiences, loyalty rewards and content.

Such a high degree of personalization involves compiling and processing a vast amount of information on transactions, web behavior, customer needs and expectations (by electronic means).

Imagine entering a store and being recognized through geolocation. As soon as you arrive, the store would send you, on your smartphone, offers of products that perfectly match your needs, tastes and preferences, along with discounts to ensure your loyalty!

This is not science fiction. It is already available today and will become more widespread in the years to come.

The future of retail

Storefronts will undoubtedly continue to exist. The findings from our simple survey question clearly demonstrate that the need for stores is there, but they will need to transform themselves in order to respond to new customer expectations.

It will take detailed knowledge of these needs and expectations, along with an appropriate and personalized response, to ensure success. Data science will be increasingly used to get this right.

There has been a lot of talk about the new Amazon Go store in Seattle that lets customers shop and leave without paying, and praise for the convenience of this innovative service (customers' smartphones record their purchases). It is curious, however, that there has been little mention of the tremendous opportunity for Amazon to accumulate data on the shopping habits of its customers in order to offer them a personalized selection of products and content.

All merchants can now avail themselves of such tools, because they have become much more affordable than they were even a short time ago. They are no longer the sole preserve of giants like Amazon.