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How will brick and mortar stores survive?

Posting in Architecture

In the last decade, sales in traditional brick-and-mortar stores in the U.S. have grown 50 percent. That would be good news except online sales have grown 12 times over and could double by 2020. According to an article in Urban Land Magazine by Leslie Braunstein, a combination of changing consumer behavior, a sluggish global economy, increasing competition, and price transparency is causing the online sales crush.

Where in the past, stores could count on local markets and a geographical buffer from competition, the online economy makes it possible for stores located anywhere in the world to sit next to each other in search results. At the Urban Land Institute (ULI) Fall Meeting, Mitchell Weimer of Deloitte Consulting pointed out that "even bricks-and-mortar stores compete with their own online platforms." Weimer offers short term solutions of re-purposing stores as showrooms while  that in the long term, stores will need to get smaller and re-brand.

It seems even in the retail world, the middle is being pushed out:

"In the future, Nelson [Andrew Nelson, director of research and retail sector specialist for RREEF Real Estate] predicted, shopping centers will have more and smaller stores, with higher sales volumes driving higher rents. Commodity retailing and secondary locations will suffer, he predicted, while bricks-and-mortar winners will include luxury retailers, discount and value retailers, well-located grocery-anchored centers,  and retailers offering compelling shopping experiences."

Retailers in the U.S. might look to the European example, explained by David Armitage, head of enterprise initiatives for Corio N.V.

...value-added taxes can make shipping costs prohibitively expensive in Europe, while the walkability of European cities supports shopping as a daily activity. His company is taking the shopping experience further with such traffic-generating activities as providing educational opportunities in vacant retail space, creating a demonstration food garden at one shopping center, hosting a high-profile international jazz festival, mining data to provide customized special offers, and using social media extensively.

What will set traditional stores apart is the ability to provide a compelling, unique customer experience as well as convenience and a coordinated online presence. Kind of like these guys.

How Retailers are Adapting to Online Sales Trends [Urban Land Magazine]

Image: Michael Senchuk

— By on October 19, 2012, 8:08 AM PST

Sun Kim

Contributing Editor

Contributing Editor Sun Joo Kim is an architect and creative consultant based in Boston. Her projects include design and master planning of museums, public institutions, hospitals, and university buildings across the U.S. She holds a degree from Carnegie Mellon University and is a member of the U.S. Green Building Council. Follow her on Twitter. Disclosure