IDENTIFYING WAYS TO BE MORE PROFITABLE WITH E-COMMERCE IS ESSENTIAL IN THE SHIFT TOWARDS DIGITAL.
The digital landscape has undoubtedly been impacted over the past two years. Companies were forced to accelerate their digital capabilities—and now face the challenge of optimizing and refining their digital practices to scale.
The expectation is that e-commerce is and will continue to have a greater share of commerce going forward, but that more work needs to be done to increase profitability.
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JACKIE WALKER
jackie.walker@publicissapient.com
713 496 9852
publicissapient.com
For nearly two years, retailers have faced COVID-19 lockdowns and restrictions, with e-commerce changing consumer expectations and the role of physical stores and online channels.
The desire to return to physical retail can be seen in pockets of the world where lockdowns have eased. When stores in the United Kingdom reopened in April 2021, sales rose 9.2 percent month-over-month, with a 218 percent jump in foot traffic in the first week after reopening. In the United States, retailers like TJ Maxx have credited consumers’ desire for “treasure-hunting” experiences for strong post-lockdown sales.
(Source: Publicis Sapient research, United Kingdom, 2021)
“Even with the massive shift towards online shopping, the physical store is not going away. In 15 years, brick-and-mortar stores will still be relevant, and they will be the best place for consumers to experience a brand,” said Hilding Anderson, head of retail strategy, Publicis Sapient.
Making a memorable and meaningful brick-and-mortar experience requires a modern-day take—one that combines the convenience of the digital tools and services consumers have become accustomed to with an inherently unique experience. Here, we explore how retailers are evolving their store footprint to bring new experiences to digital-first shoppers, using data and technology to connect online and offline journeys.
The pandemic has changed everyday life. The realized potential of remote work has led to an exodus from city centers that once thrived from a commuting workforce, with populations of shoppers swapping rituals of the road for at-home comforts.
According to consumer location data from Publicis Sapient AI Labs, U.S. traffic to coffee shops and bakeries—a staple of a typical morning commute—plunged at the height of lockdowns in April 2020, with some uptick as physical locations began to reopen. Convenience stores and service stations, frequented by those who may drive to work, saw a similar trajectory. Both categories saw a sharp drop in traffic in April, followed by a slight rise as restrictions eased.
“People have relocated, and a lot of people are working from home—they don’t come to the office as often,” said Thierry Elmalem, senior managing director, management consulting, Publicis Sapient. “Retailers will have to change the number of stores they have or relocate stores to where new demand is.”
In 2020, an estimated 12,200 store locations closed throughout the United States, up from nearly 10,000 in 2019. Coresight Research estimates that another 10,000 stores will shut down in 2021, with 4,000 new store openings in the U.S.
COVID-19 restrictions were a catalyst for companies already struggling to maintain profitability at low-performing retail locations. These closures also created space for new entrants into the brick-and-mortar market, with digital natives like Netflix, TikTok, and Amazon announcing plans to expand their physical footprint. Other retailers are using this period to repurpose existing stores to increase profitability, either as dark stores, click-and-collect outposts, or experiential spaces.
“This is demonstrating how companies are re-evaluating the business case for their retail footprint,” said Andy Halliwell, international retail strategy lead, Publicis Sapient. “It’s no longer just about sales, but looking at stores as a very large investment in out-of-home media to create brand awareness.”
Organizations must understand how stores fit into the broader needs of the business and the consumer to create a competitive attack plan and gain market share.
“Combined, this intelligence will help retailers make the right decisions on how to evolve their footprint,” Elmalem said.
Loblaw has been changing the way Canadians shop since 1919, and it was the first grocer to offer click-and-collect to shoppers in Canada. The strategic rollout of express click-and-collect pickup has put 75 percent of Canadians within 10 minutes of a Loblaw location, making order collection easy while expanding the grocer’s footprint.
Learn more here.