Recent headlines allude to the downfall of brick-and-mortar at the hands of e-commerce, but I have a more optimistic view of what lies ahead for retail. Technology integration in the retail experience is going to bring about a retail resurgence. Here’s how.
Rise of the seamless purchase process
An undeniable benefit of e-commerce is the lack of checkout lines, but technology can revolutionize the way consumers make in-store purchases, too.
Think Amazon Go: the new grocery store concept currently in beta testing in Seattle. It has completely removed the hassle of a checkout line from the in-person shopping equation. Thanks to smart sensors, customers can walk into the store, grab their items, and leave. Their purchases are automatically tracked when they walk out the door.
People want the experience
Experiential retail stores are thriving because they provide consumers with experiences they can’t get online.
Stores like REI and Restoration Hardware provide immersive experiences that make shopping feel like an exciting activity rather than a chore. Even though their products are available online, their brick-and-mortar retail locations continue to succeed because of the experiences they provide. Consumers now have the opportunity to climb a rock wall while they shop (REI) or drink a glass of champagne on every piece of furniture that’s for sale while they browse for their next purchase (Restoration Hardware).
The key to the continued success of experiential retail will be, of course, the integration of technology. Buyers will want to shop every item they see in the store from a smartphone or other internet-connected device in real-time, and experiential stores that accommodate that desire will see an uptick in sales.
Some things are better in person
Even with the rise of e-commerce, consumers still believe that some things just shouldn’t be bought without testing them out.
Warby Parker, a prescription glasses retailer, began as a purely e-commerce business that sent customers a selection of glasses they could try on at home and send back for free. They bet big on e-commerce, but quickly learned that people didn’t want to wait to try on their glasses or wanted to try more than just a handful of pairs. They made the transition into brick-and-mortar retail while maintaining their e-commerce presence.
Research featured in Harvard Business Review shows that many of today’s most successful retail brands are doing the same. And it’s been found that consumers, especially Millennials, are “webrooming,” or researching product options online and then purchasing them in real life. In fact, customers who did prior research online spent 13 percent more in stores than those who did not.
Here again, smart tech integration will be critical. Thanks to artificial intelligence, retail stores will soon be able to offer the same types of personalized recommendations and customized shopping experiences consumers enjoy online, with the added benefit of a physical sensory experience that is so important for many purchasing decisions. The early adopters of this technology are poised for real success.
The future of brick-and-mortar is different from what we’ve known for our whole lives, but that future is bright. The days of big box chain retailers offering identical shopping experiences are coming to an end, and the retail experiences of tomorrow are unique, interactive, and tailored for each shopper. If Macy’s wants to survive in the age of e-commerce, it has to offer more than just merchandise in its locations.
The retail stores that succeed in the future will be exciting and experiential while simultaneously offering seamless transactional exchanges. They will use sensors for effortless purchases, predictive technology and app integration for individual customer recommendations, virtual reality so customers can experience a product before buying, and unique points of interest like restaurants, cafes and art galleries within their walls.
Commercial real estate professionals are trusted advisors and must be ready to offer recommendations for how retail investors and buyers can utilize spaces and technological advancements to ensure success in the digital age. And as experiences become an increasingly important part of the retail experience, retail locations will likely need to be larger to accommodate that change.
As the co-founder and CEO of a commercial real estate tech company, I’ve spent my entire career immersed in the ever-evolving tech world and thinking about how new advancements impact CRE. Brick-and-mortar retail is on the cusp of complete transformation, and I for one am hopeful that technologies like artificial intelligence and predictive technology will revolutionize retail and the commercial real estate industry that serves it.