Merchant Innovation

Are Real Stores Cool Again?

It turns out e-tailers aren’t going to consign real-world stores to the ash heap of history — at least not yet. Shoppers are increasingly returning to stores, according to online company executives at the Digital Life Design conference in Munich this week.

While growth in Internet retailing has outpaced store-based sales gains in recent years, data from researcher Euromonitor show that the mall is starting to reclaim some ground, Bloomberg News reported.

“People are craving real-life interaction for shopping,” said David Hayes, head of creative strategy at Tumblr, which has worked with retailers Gap and Levi’s to guide customers to events such as music performances and promotional parties in stores. “There’s a trend going from URL to IRL — ‘in real life.'”

While in-store revenue growth will accelerate to 4.9 percent in 2019 from 1.6 percent in 2013, e-commerce sales will slow their growth from 21 percent to 12 percent, Euromonitor predicts. Shopping in brick-and-mortar stores still accounts for more than 90 percent of retail revenue globally.

Still, underinvesting in stores can lead to a sales drop that can’t be made up for by growth online, according to a Bain & Co. report last year, noting that retailers must blend digital and physical store experiences.

It works both ways. After three years online, Italian shoemaker Aquazzura opened the company’s first store in October. While the store does sell shoes on site, salespeople encourage shoppers to try shoes there and then place orders online when they return home.

But Rocket Internet CEO Oliver Samwer disagreed with the notion that real-world stores can successfully compete with e-tailers. Shopping online and picking up in-store is “overrated” and a defensive move by traditional retailers, Samwer said. “There might still be people who try on clothes offline, but I think over time we will see that that is a very small minority.”

Samwer acknowledged that Zalando, a startup that Rocket incubated, operates a handful of physical stores in Germany, where excess inventory is sold at a discount. But Samwer said those stores won’t likely ever represent a major chunk of revenue.

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