Consider a retail shop owner smiling quietly while wrapping purchases for customers during the height of brick-and-mortar stores.  The feel-good in person experiences were representative of the "why" for traditional store front retail operations and propelled the foundation that kept them going, customer loyalty.  For years, doorbell sounds signaled another opportunity for a return customer.  But for some time now, the constant sound of customer activity has been in a dependable decline for many brick-and-mortar retailers. 

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Even with some success employing social media campaigns, many retail stores today continue to see a slowing of foot traffic, leaving too much available time for employees to once again adjust what was already an orderly display, filled shelves and racks.  

 

As markdowns take the lead and inventory forecasts fail, retail shop owners wonder how long the business can continue. The question becomes, "are there still opportunities for business owners with storefronts, or must retail now be entirely digital-first"?

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Outlook for Retailers: Tracking the Consumer Shift by the Numbers

To no surprise, modern consumer behavior, whether at the store front or online, continues undergoing profound changes thanks to two major catalytic forces: the astronomical rise of e-commerce and new post-COVID-19 shopping habits.  Regarding predictions, online shopping remains in the growth column.  According to Statista, e-commerce revenue in the United States is forecasted to continuously increase between 2024 and 2029 in total 657.8 billion U.S. dollars (+53.79 percent). Yet, brick-and-mortar’s year-over-year revenue growth pales in comparison, averaging around 2% annually during the same period.

 

What's the driver to online shopping?

Multiple factors drive consumers’ acceleration towards online channels:

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Greater Convenience

Today's shoppers demand seamless digital experiences when and where they choose, with McKinsey reporting 80% now prioritize accessibility and ease above brand loyalty or other factors when deciding where to shop.

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Pricing Advantages

By minimizing overhead expenses like retail leases, e-commerce players frequently undercut physical store pricing for similar items while still achieving strong profit margins.

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Pandemic-Induced Digital Adoption 

COVID-19 restrictions clearly accelerated consumers’ shift towards digital purchasing. But while restrictions eased more than two years ago now, many customers opt to stick with newly formed online-first shopping habits.

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Despair Not

Retail shop owners should not be counted out.  NRF’s 2024 economic report contends that 60% of shoppers still express preference for experiencing products first-hand in physical stores prior to buying when it comes to categories like apparel, footwear, accessories, and home furnishings.

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Plan for success

Nimble retailers are discovering opportunities by embracing omnichannel capabilities. These hybrid approaches integrate physical and digital operations to meet consumers’ expectations for seamless shopping experiences.

Shop owners should consider mass retailer Target, for example. Optimizing its buy-online-pickup-in-store (BOPIS) offerings led to a 35% annual increase in same-day services revenue in 2023.  As well as pleasing many customers, BOPIS also helped Target slash shipping costs by leveraging in-store inventory for digital order fulfillment.

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Revenue Growth Rates for Leading Omnichannel Retailers

Adopting an omnichannel strategy to make service seamless for customers, often includes:

• Ease of in-store returns processing for online purchases

• Virtual shopping via one-on-one video chat

• Contactless self-checkout stations

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The bottom line

Customer behaviors have shifted, perhaps permanently. To remain viable, retail shop owners must adapt quickly to the new normal of consumer shopping.

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Despite razor thin margins, three strategies have emerged that could help struggling business owners regain their footing:

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Smarter Inventory Management

Today’s rocky retail landscape leaves little room for guesswork or approximating demand. Getting inventory planning wrong sinks profits fast. Frequently, physical retailers require better visibility into sales trends and future needs. Investing in demand forecasting and optimization tools like SAP helps minimize waste, improve turnover velocity and keep cash flowing.

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Seamless Omnichannel Offerings

Allowing online and brick-and-mortar operations to function as separate silos doesn’t cut it anymore. As Target demonstrated, tightly integrating both arms under one unified brand experience significantly boosts revenue while breeding long-term customer loyalty.  Enabling people to seamlessly research products online before visiting a store to see, touch or try items and then choose whatever purchase method they prefer goes a long way towards matching digital-native competition.

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Precision Digital Marketing

Gone are the days of blasting followers with generic social media ads and hoping something sticks. As options explode, precision keeps marketing effective.  For example, eco-friendly candle maker Green Bean Candle Co. collaborates with like-minded micro-influencers on Instagram. Specialty grocer Picnic & Pantry connects with specific customer cohorts thanks to tailored Google search ads.  More than ever, retail shops and online marketing efforts must include an alignment of people and publications.  For example, ask Lita at Scoop and Share ® to assist in the elevation of your brand's awareness.   Publishing by Lita places discussions about helpful products, services and information at the forefront of content for consumers to get scoops and share.  Through this positive lens, Scoop and Share ® makes the valued difference in heightening how brands are viewed by consumers. 

Email inquiries:  AskLita@ScoopandShare.com

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As for investors ...

Investors continue to seek opportunities in the retail space

Though the path ahead remains filled with pitfalls for many business owners, retail’s metamorphosis also presents myriad investment opportunities.

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Retail Tech

Venture capitalists eagerly track tech-driven disruptors reshaping customer experiences and operational efficiency. For example, retailers implementing AI-powered solutions for personalized recommendations or inventory optimization increased yearly revenue by 40% or more according to studies by McKinsey.

Additional areas investors find compelling include:

• Direct-to-consumer subscription brands

• Digitally-native vertical brands

By incorporating data-driven personalization and leveraging online channels, these disruptive brands connect with customers in more relevant ways while bypassing middlemen.

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Investors seeking long-term outperformance will want to focus on retailers embracing flexible business models rather than clinging to legacy distribution channels alone.  Companies blending physical and digital operations appear better positioned to keep pace with consumers’ digital-first, omnichannel preferences regardless of further industry evolutions.

 

Maximizing Marketing ROI

In today's noisy retail landscape, marketing teams must ruthlessly prioritize effectiveness and return on investment. Generic campaigns might boost vanity metrics like impressions but won't move the revenue needle. 

 

Savvy retailers obsess over customer acquisition cost (CAC), lifetime value (LTV) and similar performance indicators courtesy of data analytics tools.  Key consideration:  cloud-based platforms like Google Analytics, HubSpot and Salesforce provide marketer visibility into what's truly working across channels.

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While turbulence remains ongoing, opportunities wait for agile business owners and investors alike even amidst retail’s structural shakeup.