The latter touches on a prominent concern in the retail sector: the role of the physical store. Times are difficult for the physical store. The newspapers regularly carry reports about the increasing number of empty stores and inner-city degeneration (Rijlaarsdam, 2013; Toonen, 2014) and unsettling reports about the loss of the high street (Erich, 2014). Reported causes for this are: the rise in online competition, direct selling by brand manufacturers, municipal policy, changing consumer buying patterns and a separation in the steps in the buying process as a result of which orientation, selection and transaction no longer necessarily have to take place in the physical store: “These days customers buy in a different way than they did in the past. Firstly we look on the Internet at what we want to buy, the prices and we compare products and then we decide where we want to buy. Buying in the store has become a choice and no longer a necessity.” (Molenaar, 2011, p. 10).
The importance of the store is often substantiated by a number of specific figures that are repeatedly quoted – namely that 70% of buying decisions are made in the store and 68% of them are impulse buys (Stahlberg & Maila, 2012). This has caused a shift in budget to in-store advertising, eye-catching packaging and in-store special offers. However, the percentage of impulse buys is substantially less (44%) and the majority of people use a shopping list (Levy, 2012). With regard to the 70%, Van Gaalen (2012) says: “We would love this to be true, but it does seem a bit high, doesn’t it?” (p. 131). In his study of more than 10,000 shoppers he found that only 20% of people made ‘unplanned purchases’: “the majority of shoppers do plan what products they will buy in advance, as well as which brand they will buy. (…) The effect of in-store impulses is lower than many people like to believe.” (p. 132). An even more important argument that makes a plea for the physical stores is to make reference to the conversion ratio of shops: “Conversion rates in the physical stores are way better than in the online world. (…) The conversion rate from going to a site to buying something is only 0.5 to three per cent. In the real world it’s 20 in fashion, 50 per cent in electronics and 96 per cent in grocery stores” (Williams, 2014, p. 116).
The positioning of the physical stores as a channel must take into account the strengths and weaknesses of the channel compared to a different channel, such as webshops, for example (see also Van Vliet, 2008). Table 1 contains a list of the features of these two channels. These features relate to the selling of physical products. For digital products, such as music downloads and streaming (iTunes, Spotify) and the purchase of tickets (travel, concerts) it seems that the argument is already won because this is where the disappearance of physical stores is happening the most.
Table 1: Features of the physical store versus the webshop channels
What is interesting now are the crossovers that are created for parrying the strengths of the other channel. The concept of the ‘endless isle’ in the store is intended to counteract the normally limited product range by also presenting to the in-store customer the online product range but with the added benefit, for example, of advice from the store staff. An example is the Chasing shop in Amsterdam. Another crossover is to remove the queues at the tills in the physical store by having a lot of staff in the store so that the customer can pay immediately (Apple Store in Amsterdam), or the endless searching in a supermarket for a product whilst online it can be found immediately: “To illustrate the future role of the portability of mobile devices, consider a customer with a RFID-enabled mobile device that also contains a personal shopping list. When he walks into a grocery store, the store’s RFID reader can identify him and match his preferred brands to the listed items. The mobile device can display an in-store aisle-by-aisle route using the GPS, update the invoice in real-time as items are added in the shopping cart, and make an electronic payment as he walks out the store without having to wait in line to pay.” (Shankar et al., 2010, p. 119).
The majority of survival scenarios for the physical store focus on the strengths of the store and the weaknesses of the webshop: personal contact/advice from the staff, the ability to feel and see products and the appearance of the store/local environment: “Online shopping lacks the aesthetic value compared to traditional shopping – colors, fabric and sizes – as well as the fun and social component” (PWC, 2013); “The ambiance in a shop is becoming an increasingly important sales aspect ” (Hofste & Teeuw, 2012, p. 22); and “Shops have to create added value through advice, the presence of physical products or through offline experiences.” (Molenaar, 2011, p. 112). This is also what consumers themselves say are the most important reasons for continuing to go to the shops: seeing and trying the products, personal in-store advice from the staff, immediate availability of the product as well as special in-store offers (DigitasLBi, 2014). For consumers the most important reasons for not ordering online are: want to see/feel products before buying (37%), delivery costs too high (36%), concern about quality of products (26%) and the ease of sending returns (20%) (Schut et al. (2014). Capitalising on the physical location / environment of the store results in all kinds of scenarios for achieving the best possible response to the unique location and the consumer who is present there such as in inner cities, train stations, workplaces and events (see INretail, 2014).
A recurring word is once again ‘experience’: shopping must be an indelible experience and must mainly be enjoyable (Molenaar, 2011; Rijlaarsdam, 2013; Van Heusden, 2013; Shopping, 2014). Occasionally it seems that naivety strikes and it is only a question of a coffee corner and a smile from the staff: “Think, for example, of a social corner with newspapers, magazines and coffee, a smile from friendly staff, videos and music in the store, nice posters and terminals where purchases can be made. It’s not so difficult” (Molenaar, 2011, p. 21). The fact that it is somewhat more complicated than this is evident from, for example, the experience from the J.C. Penney clothing store. This department store brought in Apple’s top manager Ron Johnson in order to address falling visitor numbers and sales. The restyling resulted in an interior like an Apple retail store: austere white cabinets, bright light, natural varnished wooden floor, lots of space and no special offers. The customers fled en masse to competitor Target, from where Johnson was once headhunted by Apple!, on the other side of the shopping centre. Exit Apple top man (Van Heusden, 2013).
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DigitasLBi. 2014. Connected Commerce. Comparative Analysis. March 2014. Advance/DigitasLBi.
Erich, M. 2014. Winkelgebied 2025. Samen in beweging. ING.
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