THE WHAT? The last 12 months have been tough on retailers worldwide. Department stores are dropping like flies, Walgreens Boots Alliance is struggling and Ulta’s shares are falling – could this be the year that online overtakes bricks and mortar as the channel of choice?
THE DETAILS For although even the likes of Amazon and Alibaba can no longer take their meteoric revenue rises for granted, the advent of livestreaming, one-day delivery and special events such as Singles’ Day and Black Friday have kept up the momentum, and these platforms continue to invest in the future; Alibaba recently debuted a 2.0 version of its Tmall flagship store, for example, and Amazon only needed to announce its entry into the professional beauty category to send shares in Sally Holdings and Ulta Beauty tumbling.
And there’s plenty more growth to come as Alibaba revealed, it’s targeting the more remote regions of China where bricks and mortar stores are scarce, bringing products to life via livestreaming services. At the same time, consumers are increasingly at ease with online shopping; even if they trial a product in store, they’re more likely than ever make the actual purchase from the comfort of their sofa (and if it arrives via drone or Deliveroo, all the better).
For that reason, it’s become crucial for stores to take on the mantel of entertainer and educator – in today’s omnichannel world, they’re competing for our Saturday afternoon, not necessarily our dollars so they’d better make it worth our while. Enter the world of in-store You Tube studios, sampling, services and social spaces, common causes, eco-features and selfie walls. In other words, retail now has to have a raison d’etre beyond ringing up.
Of course, the other way to fight back is to embrace all the digital bells and whistles – Lush has done just that, opening the world’s first ‘language free’ store in Japan while virtual try-on tools are as popular as ever. And Walmart is seeing its persistence in the online world pay off, raising its annual profit forecast after e-commerce sales rose 41 percent in the last quarter.
THE WHY? Is the IRL store on its way out? In a word, no. To refer back to my first paragraph, department stores and drugstores may well be struggling but that isn’t beauty’s fault. For the former, it’s fashion’s fall from grace that has hit the bottom line, while the latter is grappling with low prescription reimbursement rates. Indeed, so lucrative has the beauty category proven for UK-based Harrods, it’s opening a cosmetics standalone, a move that doesn’t spell ‘gloomy outlook’ to us. Equally, digitally native brands frequently cross the divide into bricks and mortar, a move that simply wouldn’t be necessary if online was the only way – Glossier’s London pop up, Kylie and Ulta or Lime Crime’s upped presence in the self-same chain are all prime examples. What’s more, it’s worth noting that there’s one physical retail channel that’s smashing it out the ballpark, and that’s travel retail – shopping needs to evolve but it’s by no means obsolete.