By Sterling Xie
As brick-and-mortar retail stores reopen after the pandemic, online shopping still remains on top. E-commerce stores surely are still a minority in the market, but the COVID-19 pandemic has expedited the digitization of stores, bringing some of the largest retail stores like Sears to bankruptcy. However, that begs the question—are all physical stores going to face the same fate?
Today’s Market
Consumers today are increasingly in search of the cheapest, most convenient ways to access goods, which often means turning to electronic consumerism. The COVID-19 pandemic led to record growth in e-commerce stores and a sharp decline in in-person stores. In 2021 alone, over 1,000 brick-and-mortar stores were planned to close, but this was not only because of the COVID pandemic. 80,000 more stores are planned to shut down within the next five years.
However, brick-and-mortar stores are still predicted to remain resilient. E-commerce stores simply are not profitable enough to stand alone, as a strong brand and physical presence is needed to make virtual stores successful. In fact, physical stores account for 85% of retail sales despite the growth in e-commerce.
Why?
There is overwhelming evidence that brick-and-mortar stores will be here to stay. Psychological theories conclude that people naturally prefer physical interaction—in-person sociality brings greater customer satisfaction. Therefore, e-commerce requires more marketing than retail stores have. The in-person outreach associated with brick-and-mortar stores decreases the amount big corporations need to spend on advertising as brick-and-mortar stores provide a greater, intimate connection with the consumer.
Whether it be searching the shelves of the produce section of a grocery store or trying on clothes at the local shopping mall, it is a lot more convenient for people to know exactly what they are purchasing rather than relying on the pixelated images on their computer screens.
In general, shopping is no longer a chore, but an experience. Americans see a mall outing as a social event, not as a necessity. E-commerce stores simply cannot recreate the experience of being in a physical retail store.
Predictions
E-commerce and physical stores will be deeply linked into the future. Big e-commerce businesses like Amazon have reported record sales from their physical retail sales and big physical businesses like Costco have begun expanding their catalog of goods online. Whether we prefer in-person retail stores or online stores, the future is sure to hold a balance between the two.
Even with the speculation of the downfall of brick-and-mortar stores and the continued decline in their revenue, it is safe to say big retail stores will remain resilient. While the pandemic has shifted our focus to the Internet and digital markets, loosening pandemic restrictions have driven consumers back to brick-and-mortar stores, proving that the in-person shopping experience is still necessary for consumers today.