Bricks vs. Clicks: Growing a Retail Monster

Brick and mortar (BAM) retailers have faced a strenuous uphill battle over the past 15 years. And it’s shaping up to continue to be a rigorous hike, ascending rocky plains with no real mountaintop in sight in the near future. Namely, this is because the ecommerce monster, what one could say is an invasive species for BAM retailers, has been slowly eating up the food source in the battle of bricks vs. clicks.

Rewind back 40 years ago, during the ‘70s, when the baby boomers were the next generation, and that’s when you can really find the fuel that powered the BAM building frenzy. As a Forbes article explains, the mantra was “If you build it, they will come.” And indeed it worked. Shopping malls were being erected nationwide at such a pace that the U.S. was consuming more cement than any other nation.

Baby boomers loved the convenience of nearby shopping malls, where they had easy access to a mecca of stores that sold all the goods they needed to accommodate their expanding families. The cement behemoths with large parking lots were the ideal stomping grounds for boomers’ spend-happy needs, replete with a confluence of stores that appeased their buying mindset.

Then generate X and Y came along. And then, the internet became a realization for society. After the internet became mainstream in the early 90s – it was birthed officially in 1962, when J.C.R. Licklider of MIT sent some of the first web/social conveyances that discussed his illustrious vision of a “Galactic Network“, thus codifying the first instance of social usage and communication online – the official battle of bricks vs. clicks began.

Still, online shopping in the early ‘90s was hardly even a trite comparison to the trillion dollar beast that e-retailing has evolved into today. This is back during the day where AOL was the dominant force, and where internet time was paid for by the minute, and people were still using antiquated Motorola flip-phones that didn’t even have internalized contact lists.

Brick and mortar continued to prosper during this time, namely because online prices were offset by the cost of shipping, the cost of using the internet, lagging dial-up speeds and overall lack of demand from shoppers, who would rather, in most cases, get their wares from the local store. Thanks to Darwinism, and a dash of technology, the internet slowly did speed up. By the time the ‘2000s arrived, BAMs suddenly had a competing force to deal with.

As 2008 set in, the flurry of toxic, global economic meltdown that ensued saw many brick and mortar retailers downsizing to make ends meet. Suddenly, consumers were more interested in using ecommerce. In entered juggernaut online conglomerates like Amazon and eBay, and, well, the rest is sort of history.

The battle of bricks vs. clicks really heated up in 2012. According to a report by ComScore, $38.7 billion was spent by consumers online between just the months of November and December during this year, setting an all-time record for sales while earmarking a 16% increase from the year previous.

Of course, something new was on the plate for the ecommerce monster. The gourmet feast it devoured this time was national “free shipping day,” Monday, December 17, 2012. On that day alone, e-retailers had their biggest realization yet: offering free shipping saw $1.01 billion in sales come from online spenders, demonstrating a staggering 76% increase from sales on the same online shopping holiday from a year prior (December 15th, 2011).

But brick and mortar is far from dead just yet. Many of these retailers have realized that in order to survive they must man two fronts. And plenty are doing so wonderful, namely the big box stores like Best Buy, Target, Wal-Mart and others. Major news mediums like the Houston Chronicle now offer step-by-step guides that instruct BAMs on the process of gaining an online presence and going to e-retail with their operations.

This, in turn, has spawned a new shopping phenomenon commonly referred to as “showrooming and webrooming.”

Webrooming is the manner by which a consumer browses for an item they want to buy online, but then makes a trip to the local store that offers it so they can haggle for price-matching and get the item right away; as opposed to having to wait for it to be shipped to them from an online store. In a recent report by Accenture, 65% of shoppers actually showroom or webroom to make their purchasing decisions over the holidays.

In the very same report by Accenture, the topic of showrooming was also covered. This is where a shopper heads to a brick and mortar store to shop, initially. However, once there, the shopper then looks for the same product online (typically from their mobile phone) to try and find a better deal. In 2013, about 54% of shoppers were showrooming, a percentage that increased to 63% in 2014, and that could very well surpass 70% in 2015.

• Over 90% of shoppers cited that discounts were very important when making a buying decision.
• Over 48% will be making their primary purchases on products that are offered at discount prices or that are offered on sale.
• Over 60% of shoppers polled said that a discount being offered needs to be greater than 30% off the list price to influence their purchasing decision.
• Over 38% of shoppers are using their smartphones or computers to track product prices this year.
• Over 44% of shoppers will use a price-matching service to find the best deal.
• Over 23% of shoppers desire a generous and extended returns policy when making online purchases this year.

Think back to 2004, when ecommerce was still in diapers. It represented just 2% of all retailing sales, says the U.S. Census Bureau. Hardly an impressive number, but still denoting of a multibillion dollar industry. By 2013, ecommerce accounted for 6% of all retail sales in the U.S.

For the end of the third quarter in 2013, retail sales had measurable growth of 4.7% year-over-year. But e-retailing dwarfed this metric, showing growth of 18.2% during this same time period. Tantamount to that is the fact that 2013 saw a $33 billion gain in e-retail from the same time the year prior, an increase of 33%, according to CBRE Research.