The Resilience of the Brick
There's an empty Big Box store near where I live that used to be bustling with activity. It was a Border's bookstore that had a gourmet coffee shop right in the store. Every weekend a classical string quartet would perform in the main gallery while shoppers perused the latest titles. Everything about the shopping experience was upscale and delightful.
Yet now that store site sits barren ... a reminder of the potent and powerful online retailing revolution.
A funny thing is happening these days, however. The bricks-and-mortar retailers that survived the most challenging years of the online onslaught are experiencing a remarkable resurgence. There are a number of new Big Box chains opening grand, well-appointed locations in my community. And they all have something in common: They have equally strong online presence.
Bricks-and-mortar retailers, which the 'experts' once said were based on a dying business model, are re-imagining who they are and what strengths they bring to the cut-throat world of Big Box retailing. In the age of Amazon.com, many people had written off the bricks-and-mortar players. But now they are bouncing back by leveraging their assets in the form of stores which are turning out to be fulfillment centers.
This wasn't always the case. There was a virulent disease that had stricken many retailers known as 'show-rooming.' Customers would drive to the store, peruse the wide selection, chat with knowledgeable sales staff, and determine which appliance or item of clothing was the right one for them. Then they would drive home and order that item from a pure-play web retailer.
There's a maxim in the world of business (and life, really) that there is no such thing as a pure dichotomy. That is to say, it can be dangerous to your business strategy to view things as 'either, or.' It's better to view the potential of the marketplace with an 'and.' That is precisely what the smartest bricks-and-mortar retailers have done. They are now using their spacious stores and well-trained sales associates as an advantage over the experience of someone simply scrolling down a webpage and looking at products. Customers can continue to drive to their favorite stores to 'kick the tires.' But they can also order the merchandise from the same retailer online should they wish.
Indeed, the transformation we are experiencing is from Big Box or online to Big Box with online or more broadly digital (online, mobile, kiosk, social media etc.) presence. The digital consumer who prefers scrolling down webpages in the privacy of her home can order products online. But she doesn't have to wait for the mail to arrive. If she has ordered the item from a Big Box's website, she can then drive (or, depending on where she is, even walk) to the actual store and pick it up immediately. Hence the rise of the stores acting as the local fulfillment center.
Here's where things get even more interesting. The China-based very successful retail giant Alibaba has launched an initial public offering on the New York Stock Exchange. The resulting cash infusion from selling IPO shares to the public will allow Alibaba to expand into the lucrative North American market and take on retailers of all stripes. The company will compete against Amazon, of course. But it also has plans to create fulfillment centers for digital customers who want to pick up their merchandise instantly. That means Alibaba sees how valuable and powerful bricks-and-mortar stores have once again become. They are more than just spots for 'show-rooming.' They are fulfillment centers for savvy web retailers.
I think the future of retailing is based not on choosing between a digital store or physical store. There won't exist such a dichotomy. Rather, the model that will begin to transform the marketplace will be based on an effective combination of digital and bricks-and-mortar locations. This business model essentially combines the best aspects of both retail methods. It turns out that bricks not only are strong; they're resilient, too!