Is e-commerce the fastest way to kill physical retail?
Today many in retail speak about the impending doom of physical retail given the emergence and acceleration of e-commerce. Regardless of category, e-commerce penetration has deepened and widened among shoppers. Current retail research indicates 51% of Americans prefer online shopping, with e-commerce growing 23% year-over-year. Stores are closing at a rampant pace, so it only stands to reason that the fastest way to kill physical retail is e-commerce. Despite this, some 90% of retail sales still happen in a physical store. So, is e-commerce the fastest way to kill physical retail store?
E-commerce will surely continue to eat away at the total retail sales pie, but even if it were to double overnight, it would not be the fastest way to kill physical retail. So, what is?
E-commerce Share of Total US Retail Revenue by Category
Source: Statista, 2018
Retail Delivers Experiences
Beyond visual merchandising advantages a store can deliver, physical retail has always been a place filled with discovery and (dare I say) excitement. Whether you are shopping for groceries and find a new favorite peanut butter or shopping for clothes and discover a new brand of jeans that ‘fit you just right’, physical retail lends itself to great experiences.
But, what happens when the experience goes bad?
A Grocery store visit gone wrong
My grocery store visit brought to light how a poor customer service is by far the fastest way to kill physical retail stores.
Take today for example. On the way home from work I stopped at the grocery store closest to my home from the highway (but probably the same distance from my house as two others). Having only a short list, I was able to quickly find what I needed and went to check out. When I arrived at the front of the store only two checkout lanes were open (besides self-checkout). I decided to wait in line.
I got to the front of the line and the cashier started to scan the items from my cart. She finished the second item and abruptly walked away without a word.
She went all the way across the store to the front-end office and left me standing there. A few minutes later she returned and, again without a word, completed scanning all my items. She pulled out her phone to check her texts while waiting for me to pay. Only when she had bagged my order did she look up and say, ‘have a nice day’. Clearly, she was checking the box from the corporate manual that states all cashiers should end every customer interaction in a pleasant manner, however, she failed everything else up to that point. As I grabbed my credit card, I looked at her name tag and found out the cashier was actually the Front End Supervisor!
Poor Customer Service Drives Shoppers Away
This experience brought to light how poor customer service is the fastest way to kill physical retail. I likely will not go to that store again. If this grocery store is tracking my behavior (which I am pretty positive they do) they may attribute my absence to price, location or selection. These are the logical areas to probe. But they have no way to track a poor customer experience driven directly by their cashier.
The Fastest Way to Kill Physical Retail Stores is poor customer experience. Each and every interaction in a physical retail location between shopper and associate is a valuable one. The interaction can lead to improved loyalty when done well, or lead to abandonment when done poorly.
Most people today have not only plenty of alternative stores to shop but a whole new world of options at their fingertips…literally, in the palm of their hands. Retailers will be well served to focus on customer service side as well as improving store layouts, assortment, and pricing.
Before it is too late.