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What does the future hold for brick and mortar stores?

A few months ago, I was looking to buy a laptop to replace my old desktop at home. I researched prices on most Indian online websites for the laptop configuration I wanted. I then walked into some of the stores near my house to compare prices in the stores for similar configuration, but more importantly, to "touch and feel" the product I was about to buy. Having inquired in 4-5 different stores, I returned home and ordered the laptop online. Compared to the stores, the price online was atleast 10% lower and the online retailer also threw in a free laptop bag and free 1 year subscription of an anti-virus software.

I did not realize at that point of time, but this is a low tech version of a phenomenon now referred to by one of the world's largest retailer as "show-rooming" - where the brick & mortar store of a retailer acts as a showroom for an online retailer. The retailer defined show-rooming as a "phenomenon where shoppers, typically with smartphones, scan barcodes in stores and then use a pricing application to review/compare prices with say, online retailers and then purchase the item from an online retailer." This, and associated external factors such as a slowing economy, rising unemployment and reduced consumer demand has forced many retailers to reduce costs by closing unprofitable stores in the recent past.

So what can retailers do to ensure their stores are not used as mere show-rooms?
• Become a true multi-channel enterprise.
o Provide a consistent shopping experience across channels
o Ensure consistent pricing across channels
o Consolidate inventory for fulfillment i.e. use of a single pool of inventory to promise and fulfill orders across multiple ordering channels
• Targeted promotions based on store location, customer shopping history etc.

However, the suggestions mentioned above come with their own associated costs and capital expenditure. Promotions may increase revenues but affect margins; building a unified ordering, fulfillment and delivery experience comes with its own lead time and expenditure. (Business re-alignments and IT infrastructure)

It will be interesting to see what steps traditional brick & mortar retailers take to protect their turf from online retailers while remaining profitable.

PS: As I was writing this blog, I also read about online e-commerce giants Amazon and Google's plans to open physical stores in Seattle and Dublin, Ireland respectively. Maybe brick & mortar stores will still be around for some time!

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