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Three Signs That Stores (And Not E-Commerce) Are The Future Of Retail

by | Aug 13, 2018

Did you know that last year 91% of all retail dollars in America was spent in a brick-and-mortar retail store? Crazy, right. Everybody thinks it is more like 50/50. But it isn’t. Sure, groceries, restaurants and bars are included. But even still it’s a lot more than you would think.

1. Casper is opening 200 stores across America

CEO Philip Krim told CNNMoney that Casper will open 200 stores across the country in the next three years. The Wall Street Journal first reported the company’s plans.

“It will give us a footprint to help educate consumers,” he said in an interview.

The announcement is a clear signal that Casper, an online startup that launched in 2014, believes a physical presence is still a crucial part of retail. Casper has recently rolled out 19 pop-up stores in markets like New York and San Francisco, and Krim said they are beating expectations, convincing the company to expand deeper.

Stores will help Casper stand out in a crowded mattress environment. Digital rivals such as Purple, Leesa, Tuft & Needle, and Yogabed have cropped up, while legacy retailers have taken a page from Casper, introducing delivery in a box.

“By opening stores, they are upping the ante to compete, and less well-funded competitors may be at a disadvantage,” said Kahn.

2. All but 1 out of the TOP 10 Retailers 2018 have physical retail locations

Whether it’s a revolution in retailing or just a major upheaval, whatever is happening in the industry belies the remarkable stability among the nation’s leading merchants. The annual snapshot that is STORES Magazine’s Top 100 Retailers has changed very little over the past several years. This year, Amazon.com is ranked No. 3 behind Walmart and Kroger. Last year Amazon was No. 7 and the nine other retailers in the Top 10 remained the same. As mentioned at Stores.org.

“These long-term, top-ranked retailers have done some really smart things to modernize and reinvigorate their strategies,” says Bryan Gildenberg, chief knowledge officer at Kantar Consulting.

They also benefit from retail’s measured pace of change: Merchandise moving through ecommerce accounted for only 9 percent of total U.S. retail sales entering 2018, according to U.S. Department of Commerce figures.

“For all the talk about changes in retail, it will move gradually, not as quickly as people think,” Gildenberg says. “There’s continuous change — there is some instability that is inherent to retail.”

3. Stores Are More Profitable Than eCommerce

While most of the top 10 retailers boast e-commerce arms, stores are still the meat and potatoes of their business. As mentioned by Forbes.com.

What often gets lost amid the heady talk that retailers’ online businesses are growing faster than their stores is that bricks generate higher conversion rates —the percent of store/site visitors who make a purchase — than clicks.

Secondly as a general proposition, a store purchase is more profitable than an e-commerce order, as factors like shipping and handling charges, and the costs associated with increased returns, eat into margins.

And finally, since conversion rates are much higher in stores: for every extra visitor in a store, chances are 39% that he or she will buy something. A lot higher than the average website conversion, which is around 1.5%.

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