Over the past two decades, retail analysts have been saying online shopping would spell the end for brick-and-mortar retailers. Declining sales and rising rents through the 2010s seemed to back this idea up.
New evidence of changing consumer preferences, however, suggest that the reports of the industry’s death have been greatly exaggerated.
Here’s how brick-and-mortar businesses are actually doing right now — plus how the industry is competing against online-only retailers in the long term.
Brick-and-Mortar Stores: Not Extinct Yet
During the initial rise of e-commerce in the late ’90s and 2000s, some analysts went so far as to predict that the growth of online retail sales would eventually lead to the end of in-person shopping.
By 2010, this prediction seemed like it was coming true. The closing of many locations, dubbed the retail apocalypse, picked up in earnest in the years after the 2008 financial crisis. Reduced consumer spending and soaring rents made it challenging to keep stores open. Over the last decade, tens of thousands of stores across America shuttered, and many brands that had become household names — like Borders, Toys ‘R’ Us and Blockbuster — went under.
Consumer spending research seemed to back up the theories that online retail was one of the factors behind the decline. Over the past decade, a significant chunk of consumer spending has shifted from in-person to online. At the same time, research also showed that new spending was primarily being generated by online retail juggernauts like Amazon.
By the numbers, things still look pretty bad for brick-and-mortar right now. Shops continue to close in large numbers, and current research estimates that 75,000 stores could shutter between now and 2026.
If you’ve been following the industry for any amount of time, this is a familiar story. However, it’s not the complete picture.
Why Customers Still Shop at Brick-and-Mortar Retailers
Changing patterns of consumer habits may save brick-and-mortar retail.
New research has shown that millennials and Gen Z — often called the “online generation” — actually prefer brick-and-mortar shopping to online retail, and by a significant margin. About 81% of Gen Z shoppers say they shop in person when possible, and 73% like to discover new products in stores. These surveys are backed up by additional data. While just 13% of baby boomers and 29% of Gen Xers shopped in-store last year, 43% of millennials and Gen Z shoppers planned to buy in person.
Younger generations were also more likely than older generations to have a favorable opinion of their brick-and-mortar shopping experience.
Some industry experts have already raised suggested that younger shoppers could save brick and mortar from the retail apocalypse.
Surveys show that younger generations are returning to brick-and-mortar retailers because they can offer a shopping experience that online retailers can’t. Right now, 46% of Gen Z shoppers are concerned about their mental health and well-being. As a result, they are in search of ways to unplug, rather than spend more time on the web. Brick-and-mortar stores can provide Gen Z shoppers with a kind of offline retail therapy — browsing shelves and clothing racks allow them to disconnect from social media and the internet.
Shopping in-person can also be preferable when it comes to physical goods — like clothing and cosmetics — whose quality and appearance can be hard to gauge from online listings alone.
Brick-and-mortar retailers are also receiving a boost from other changes in consumer preferences — like Gen Z’s desire for sustainable and eco-friendly goods. Shopping in-person can often be better for the environment compared to having items shipped directly to your home or apartment. Online purchases also result in a lot of extra packaging — cardboard boxes and packing materials like air bags and styrofoam packing peanuts —that can be difficult or impossible to recycle.
How Brick and Mortar Businesses Can Compete Against Online Retailers
While the changing preferences of Gen Z and millennial shoppers are good news for brick-and-mortar retailers, it’s not likely that sales at physical locations will be enough to sustain these businesses.
Stores that haven’t already embraced online shopping should consider investing in e-commerce and their company’s online presence. Only around one-quarter of small businesses are using the internet to sell their products. If you own a small business that’s not online yet, investing in a digital storefront could provide a serious advantage over regional competitors and even help draw attention to your physical location.
Developing an online storefront will also allow you better access to client data, which can help you measure and maximize things like customer satisfaction. Online advertising and presence on social media will also likely be key to your business’s success.
Implementing features that take advantage of both an online and physical presence, like a “buy online, pick up in-store” option, could also help your business leverage both of its storefronts.
In the future, all retailers will probably want a combination of e-commerce and brick-and-mortar locations. Even online giants like Amazon are starting to move in this direction.
How Brick-and-Mortar Retailers Can Adapt Right Now
Brick-and-mortar retail has suffered some severe losses over the past decade. By some estimates, that’s expected to continue into the near future. However, shifting consumer preferences may start helping out these retailers. Physical locations offer benefits that online shopping can’t — like an opportunity to unplug from the internet.
In any case, however, all physical retailers will probably need some kind of online presence. Brick-and-mortar businesses that don’t have one should consider establishing one and investigating ways to leverage both their online and physical storefronts.
Lexie is a UX content strategist and web designer. She enjoys copious amounts of coffee (with a dash of milk) and walking her goldendoodle. Check out her design blog, Design Roast, and follow her on Twitter @lexieludesigner.
