Is Bricks And Mortar Retailing Really Dying?

Umut Cikla

Global e-commerce has grown at an impressive rate in recent years. But like everything else, this aggressive growth rate will come to an end.

As shown in the graph, global e-commerce is slowing down. Growth is expected to
continue, but at a slower pace. In fact, the e-commerce growth rate has come down from 23% three years ago to 16% today, and it is expected to drop to 13% in two years.

While growth is reaching a steady pace, e-commerce does not seem to have replaced the bricks & mortar retailing completely.

Some online-only retailers, such as Amazon, have noticed this trend and have responded by opening physical stores.

So the short answer to the headline question is no. Bricks & mortar is not dying, and physical stores will stick around for a long time to come—but with a major difference.

They need to transform themselves to allow their customers to experience the best parts of both online and in-store shopping. Stores need to start delivering unique customer experiences rather than being traditional sales points.

Today, we see customers predominantly starting their shopping experiences online and visiting stores only for the unique experiences they offer. No one wants to go to a boring shopping center to buy products unless they come across a personalized offer or an interesting experience.

For example, a retailer might allow customers to design the products to their liking, or it might provide customers with digitized mirrors or changing rooms. Let’s have a look at some real-life examples.

Uniqlo’s Magic Mirror changes the color of whatever you’re wearing, or shows you how you look from behind.

Adidas’ adiVERSE Virtual Footwear Wall proves that connecting the virtual and bricks & mortar experiences together is not only possible but imperative to retail’s future.

Tommy Hilfiger’s Autumn 2015 Catwalk Show is now available to watch via a virtual reality experience in its stores. The experience gives users a perfect view of the runway and provides an exclusive sneak peek backstage.

In the retail world of tomorrow, there will be no distinctions between bricks & mortar, online retailing, omnichannel, multichannel, or anything else. There will be only one retail experience, and it will definitely be a connected experience.

Today, bricks & mortar is evolving and re-inventing itself with digital, and in my opinion the retail industry has never been more dynamic. We will no doubt continue to see plenty of creative, fun, and engaging applications to come.

For more information on digital business transformation, visit the SAP Live Business site.

Umut Cikla

About Umut Cikla

Umut Cikla is focused on growing SAP solutions in the retail and consumer products industries. He is a member of the SAP ANZ Industry Value Engineering team, which works with the broader sales and services teams to showcase to customers the business value of and the road map for SAP solutions to guide them in the relentless transformation to digital in the consumer industries.