Can Digital Save Brick & Mortar?

I have always been a believer in a portfolio approach to distribution. How and where a brand shows up in the market says a lot about that brand (consumer perception) and how that brand controls its business, driving equity (retailer perception).  A typical view on brand distribution will look something like this:  Retail & eCommerce (brand direct to consumer),  wholesale  and International 3rd party.  Wholesale is usually broken out by Majors (department store and other large nationals), Mid-majors (good sized regional players) pure play eCom, Independents and finally family. I want to spend some time discussing eCom and some food for thought tied to independent retail as we move forward into 2021. 

Over the decade I have been hearing how eCom is killing retail.  Without a doubt, there has been an impact.  At the same time, we have seen many retailers thrive.  Some retailers got on board and developed a comprehensive digital strategy complimenting their brick and mortar store(s). Other retailers leveraged their authenticity and local connections to drive their business.  While both may have worked up to this point, the data doesn’t lie here, eCommerce has grown and at the expense of many retailers.  In 2020, this has accelerated and the new normal, like it or not, will include an even heavier dose of eCommerce.

My recent topics of conversation have been surrounding independent retailers and the importance of this channel of distribution.  In 2020 we have witnessed the explosion of digital commerce as consumers have chosen to stay safe and shop from home during the pandemic.  At the same time, when certain cities lifted their stay at home orders, we saw consumers add back social shopping as a means of touching a bit of normalcy and an attempt to interact with people other than their pizza delivery guy.  The argument that I would like to make is that both mediums are critical to a brand and independents must (if they have not done so already) add eComm to their business as a means to drive growth and service their local consumers.

If you are like me, you may have previously viewed eCommerce not as local, but as a borderless way to reach consumers across the country (if not the world).  When thinking about a distribution strategy, independents were/are seen as local, servicing the community in a finite radius around their store.  Many of us viewed this as clear separation limiting the number of independent retailers permitted to represent a brand both in-store and on-line.  Here is the food for thought piece.  I believe retailers (most all) must invest in digital commerce as a means to best service their local consumer and brands must consider this approach when defining their wholesale distribution strategy.

Throughout this pandemic, my wife and I have purchased more on-line than ever.  What we have seen, however, is a large disparity in delivery times and service levels from every brand and digital retailer. All are experiencing hurdles of one kind or another.  I cannot stop thinking that this represents an incredible opportunity for local retailers to solidify themselves in their community and digital commerce could be the key. 

Who can deliver a product faster than the retailer just up the road?  Who can provide the best one-on-one service better than the retailer right there on Main Street?  Who is more supportive of the local community?  Who will exchange a product in less time than it takes to package up a return and go to the post office (let alone receive confirmation, receive the replacement product or even credit your account)?  Utilizing digital commerce as a means to be hyper-local during a time when the established on-line retailers are having hiccups seems like a great opportunity.  After-all, who do you trust most in times like these anyway?

Brands may have to view retailers that add digital commerce differently going forward.  If a retailer is trying to utilize eComerce as a means to be hyper-local, it should probably be encouraged.  This type of retailer will be important to brands and go a long way toward not just surviving, but thriving in a local market.  How these retailers fit into a brands current distribution strategy will evolve.  Make no mistake though, given the changing environment, every brand will have to rethink their distribution anyway.  This is a good starting point.

Retailers will need to be open to technology, work closely with brands and find the tools and support that is needed to go live on-line.  They will also have to view this as a full price opportunity to not only drive sales, but to differentiate their stores even further from the big box and large on-line players.  A lot of work will need to be done for sure, but the solutions do not have to be too difficult or over-burdensome.  Technology will have to be the enabler and brands will need to provide support in the form of imagery, rapid replenishment, IT integration support and more. This is where brands, retailers and technology providers will need to come together.  

Technology providers will need to think more about the independent retailer and how they can help make the consumer experience between the brand and the retailer (brick & click) truly seamless. Functionality that contemplates inventory management tied to POS, scheduling for on-line pick up in store or curbside or even same day home delivery will be critical.  Many of the retailers I know are a bit technology adverse when it comes to digital commerce.  Technology companies have an opportunity to remove this fear and work with brands to bring forward a more simplified, intuitive solution that allows retailers to be hyper-local.

I read a great white paper last week written by @WDPartners titled THE STORE OF THE FUTURE IS NOT A STORE. This paper argues that the physical environment of retail will have to change reflecting the demands of the consumer and how they want to shop.  Clear guidelines for safe shopping and try-on. Intuitive space for contactless Buy On-line Pick Up in Store, curb-side pickup and returns/exchanges (and more).  This paper presented several tangible changes that retailers will need to consider in the store of the future.  Again, a really good read that contemplates how brands, retailers and technology will come together in a retail environment.

I continue to argue that the independent retailer is and will continue to be important to brands.  The initial phase of COVID and stay at home orders was really about survival.  Create cash flow through brand eCommerce and keep the employee base safe through contactless everything.  We have learned a lot since.  Consumers have shown that they still want to shop if they feel safe and certain categories of products have driven sales both on-line and in-store.  As we move through this next phase, independent retailers will be more important as cities and towns continue to open up.  Digital commerce will be the enabler for retailers to better service consumers, better manage todays retail operation and allow them to do what they do best, be the local purveyors of great brands and connect with their communities like only they can.

As always, your comments and thoughts are welcome.