Retail Omni Channel Marketing Bricks/Online - Wave of the future

[Joel Owens]

A lot has been said about online sales growing in the retail sector and what that might mean for brick and mortar properties. There has been talk of brick and mortar properties being taken over by online.

For most retailers this is simply not true. In fact brick and mortar for retail has been doing exceptionally well across the country especially in the 20,000 sq ft and under box size. There are parts of the country especially in rural areas or cold belt states where over expansion occurred and the towns demographics did not support that level of development. The (build it) and they will come statement simply doesn't work in the weak suburban to rural type areas on a mass scale. So those types of buildings can sit for a while to get redeveloped when not in an urban core or strong suburban location.

Retailers for brick and mortar are averaging about an 8% purchase return and exchange rate on merchandise. Online averages about 20 to 30%. Total retail purchases for online are about 9% off all retail sales including brick and mortar. This is why brick and mortar is so important. Recent surveys show that the online ordering process is easy and favorable to consumers for most retailers BUT over 90% said they strongly disliked the return process and wait times for online orders. This is why cross-shopping and returns to physical brick and mortar stores for a retailer is working so well. The consumer can take the return in and not wait weeks and weeks to get resolution. In the meantime they can cross shop and buy items they need or want in the store. By giving the return in the store it can help to use that money to repurchase other merchandise versus just a return of funds credit to the consumer. The returned merchandise can be returned and sold quicker at brick and mortar where statistics show the longer it takes to get a returned item on the shelf or ready for sale the more of a discount is needed to sell the item. Online only companies have actually been expanding into brick and mortar stores.

Additional research has shown that younger demographics actually enjoy getting out and going shopping in person versus online.

While online has it's place it is NOT taking over brick and mortar. The landscape of retail is changing and evolving just like any other asset class out there. People are experiential in nature and most of the masses want to drive out and do activities with family and friends multiple times a week. They are not going to sit at a computer seven days and week and never leave the house having drones drop ship 20 packages a week to them. That is not the reality of our society as a whole living like that.

I hope you have enjoyed this article. I am a national NNN commercial broker & syndicator and love the STNL net lease & MTNL retail shopping center space.