Once upon a time, choosing whether to focus on e-commerce or bricks-and-mortar stores may have been obvious for some companies. Internet and social media usage was growing at rapid rates, so it made sense to shift budgets and focus on the online experience. Today, it’s not so black and white.
It’s true that e-commerce continues to surge; global e-commerce sales are expected to hit $7.3 billion in 2027. But there has also been resurgence in popularity for in-person retail experiences. It’s more important than ever to weigh up the options, make data-led decisions, and dive deep into your customer’s changing behaviours and shopping preferences.
Here are a few things to consider when evaluating your online vs. bricks-and-mortar retail strategy.
Despite an increasingly digital-first world, consumers are enjoying the experience of in-person shopping. Retail foot traffic has increased 2% YoY in Australia, while foot traffic is slowly returning to city centres in New Zealand thanks to workers returning to offices and increasing consumer confidence. Even digital-native Gen Z have a strong affinity to instore shopping – one survey found that two-thirds prefer making purchases instore versus online. Many “Zoomers” will research products online and on social media, then visit the shop in-person.
Speaking of Gen Z, it’s essential to understand the generational shifts impacting retail. Gen Z’s spending power is expected to grow to $12 trillion USD by 2030 and is on track to become the wealthiest generation in history. Do you know how much of your customer base belongs to this demographic? Getting under the hood of who your customers are and how they prefer to shop is a great place to start when evaluating your retail strategy. From there, you can implement marketing strategies that meet Gen Z where they are, capture their growing wallets and drive company growth.
If you’re looking for the most clear-cut answer to the question “e-commerce or bricks and mortar?”, the answer lies in your company data. If you’re deciding where to put your investment, start here first:
Assessing the performance of your existing bricks-and-mortar stores can help inform your next steps. Determine which are your best and worst performing stores. If one store is pulling its weight more than others, there may be potential to replicate its success in other locations.
Retailers can use analytics tools like the Retailwatch suite to assess performance, including market share, share of wallet, and potential opportunities. Learn more about how it can help drive growth in your stores with our free guide.
Next, forecast the potential profitability of opening new stores. We helped a quick service restaurant do just this, using data to identify new sites with the best return profile.
When digging into your data, consider these questions:
Who are my most profitable customers and where and how do they prefer to shop?
Where are the gaps in my market?
How would a new store perform in this location?
You can use Site Spotter to help inform your bricks-and-mortar expansion decisions. It provides an interactive dashboard that gives you a visible, scrollable overview of your expansion opportunities, giving you confidence and evidence to back up potential purchase or leasing decisions.
However, if the data isn’t adding up, moving that investment into the e-commerce space and growing your online presence may be a more profitable move for your company.
Let’s say your data tells you to go down the online route. Before you go full throttle on online expansion, take a step back and assess how your channels are performing. Look beyond your website traffic numbers and evaluate your conversion rates, average order value, your marketing automation system, the types of customers buying online (also known as customer segmentation), where they’re finding you online and entering your site, and the overall online buyer journey. If you discover any leaks, like a high level of abandoned carts, now’s the time to make fixes before expanding your activity.
A clear understanding of these allows retailers to invest more confidently in e-commerce and create online experiences that drive sustainable business growth.
It may be that the data shows you need to keep strong footing in both instore and e-commerce. After all, Gen Z are researching online and then still enjoying a trip to the local mall. Humans will always have a need for human interactions and experiences despite our reliance on smartphones and technology. So, don’t “put all your eggs in one basket” until you’ve got a firm grasp of what your data and insights are telling you about how your customers prefer to find, engage with, and purchase from your brand. If you’re unsure how to unpack these, we’re here to help.
Retail can be a turbulent beast. Strategies that worked five years ago won’t necessarily still work today, and as we’ve discovered, generational shifts can have a huge impact on how your products are discovered and where they get purchased. Many retailers don’t even realise they have leaks in their system or are missing out opportunities to capture more wallets.
The secret weapons are data and analytics - powerful tools to help you evaluate a pivot or further investment in bricks-and-mortar or e-commerce. Using these insights can ultimately help you maximise ROI, market share, and drive stronger growth.
If you’re not sure where to start on this journey, join a strategy session. We host these across Australia and New Zealand. Together with your top people, we’ll help you get alignment on what your goals are, your best opportunities for growth, and how data and analytics can help you achieve your goals.