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The Importance of Brick and Mortar Stores in a Digital Marketplace

Sogeti Labs
August 03, 2016

In an earlier article, my colleague, Joo Serk Lee, touched upon the challenges that retailers are facing in making sure that customers stay engaged in the physical world. This challenge is even more amplified when it comes to customers shopping for the latest fashion trends and lifestyle goods. Fashion retailers are realizing hard and fast the challenges of bringing internet savvy customers into their stores.

Cash Register. Checkout counter at the grocery store.

You would wonder why there is such a renewed push to get customers into the brick and mortar stores, when it would be far easier to engage with them online.  One word – conversion rate. Consider some of the best fashion e-commerce sites on the internet, and their typical conversion rate is anywhere between 1.5% (industry average) and 8% (holiday shopping). Now, compare that to a typical in-store conversion rate that starts at 15% and peaks somewhere at 25%. Most in-store customers also tend to have a higher average order amount. Both of these factors have resulted in lifestyle retailers investing heavily in store upgrades to ensure that customers are drawn in, and stay in the store for an extended period of time.

In-Store Wi-Fi

Remember your last visit to a large mall, and how your phone would lose all connectivity due to weak data signals. This may soon become a thing of the past, as merchants are realizing that providing strong in-store Wi-Fi leads to digital customers interacting with their friends, sharing products on social media, and increasing overall brand value.

Enhanced Trial Rooms

Studies have shown that conversion rates tend to double when a customer actually enters a trial room with items. This provides merchants with a strong incentive to enhance the trial room experience. Stores such as The Limited and JCrew are focusing on providing concierge services for customers entering the trial room, and some merchants are planning to introduce digital kiosks for online ordering options within the store.

Customer Tracking

While beacons have been talked about for a while, widespread adoption of NFC and beacon technology is only now becoming a reality and merchants are starting to gather heat maps on customer engagement and movement within the store. This will help merchants create better product strategies and improve store layouts for easier shopping.

So where do we go from here? Technologies such as Apple Pay and Android Pay provide us a glimpse of how merchants could use these technologies in stores to provide faster checkout processes for digital customers. Merchants will also focus on more social media campaigns and loyalty programs that drive customers into the stores as new social sharing platforms emerge.

About the author

SogetiLabs gathers distinguished technology leaders from around the Sogeti world. It is an initiative explaining not how IT works, but what IT means for business.


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