Could there be a brick and mortar U-turn coming?
We should definitely not be in a hurry to write an obituary for brick-and-mortar retail.
A recent article in The Wall Street Journal mentioned that Amazon plans to open large retail locations similar to Department Stores in the USA. Fascinating as well as confusing for Amazon to do so. The finer details of its planned entry to the regular retail sector are not yet clear or known. Yet, brick and mortar retail is the very business that Amazon decided to disrupt. Disrupting brick-and-mortar retail was the strategy for Amazon’s existence and growth. So why the sudden about turn?
One future trend is emerging for sure. How Amazon combines its digital and brick-and-mortar retailing strategies will define the future of shopping. And, as we all know, what starts as a trend in the USA, or in the west, generally ends up in similar or differed variants globally.
The entry of a mammoth digital leader to the business of brick-and-mortar retailing is bound to give rise to several interesting developments and theories. Knowing how Amazon operates, it seems unlikely that Amazon will sell the same products in the two different shopping environments or formats. In all likelihood, there could be a demarcation strategy as to what category of products will be sold through digital channels, and what category mostly through the company’s physical stores. And this is where all the current brick-and-mortar retailers, who also have online channels, need to focus. Majority of them, until now, have been selling the same or similar products at lower or discounted prices through their online channels, thereby hastening the process of demise of their own brick and mortar outlets.
There are several products that consumers buy routinely without much thinking. There is not much joy in shopping for them. It is becoming more and more likely that most of this sort of shopping will move fully into the digital space, as digital is a format that allows quick shopping. Hypermarkets and grocery chains must realise that, during this phase, consumers have already experienced that bulky products like house cleaning agents, detergents, bulk buying of essentials etc can be delivered as effectively via online deliveries.
However, there are categories where the shopper would like to try out products in person before deciding to purchase them. This is particularly relevant in the apparel category, which often becomes a guessing game for customers shopping online because of size and fit concerns. These are also categories where personal advice from an expert on what suits the customer best can add a lot of value. Such products are more suited for, and best shopped for, in a brick-and-mortar store.
Big data analytics and artificial intelligence are already the backbone of both digital and physical-format shopping. In the future, the role of technology will only get more prominent, more so in the case of online shopping.
Whenever high technology is introduced to society, there needs to be a counterbalancing human response that is ‘high touch’. So, as digital shopping gets more high-tech, brick-and-mortar shopping needs to be seriously redirected to be the ‘high touch’ aspect of it. And, in all probability, Amazon brick and mortar will capitalize on this.
Another significant factor that will determine the future of marketing will be how consumers behave after the pandemic. Due to rampant lockdowns, a large number of people have got into the habit of shopping online. But the big question is whether digital-shopping behaviour will continue even after the Covid scare is gone.
Most disasters of the past have shown that, during the disaster, if there is an emotional state that is dominant while a crisis is on, the post-crisis emotional state tends to be the exact opposite.
Every social force seems to create an equal and opposite force, and our post-pandemic scenario may be no exception.
As a result of the pandemic, people have been closeted within the four walls of their homes for far too long. Most are waiting to step out of the claustrophobic circumstances created by Covid and are yearning for breaths of fresh air. So, as soon as the pandemic is over, there will be a tendency for people to rush out of their homes. And, for those of us who live in Dubai or the UAE, this is already palpably visible.
Shopping malls will surely be a popular relief destination. It will be worth watching what new strategies brick-and-mortar outlets adopt to make shopping more exciting and fun as they take advantage of this retail rush. A huge amount of emphasis needs to be on serious re-training and re-skilling. A major focus of the revised retail strategies of physical stores should be to eliminate the multiple pain points that shoppers typically encounter. Amazon is moving in this direction already. The trial stores that it opened in a few US cities used technology to do away with check-out counters, one of the biggest and most obvious pain points of brick-and-mortar shopping.
In Dubai, a few players who have really used the pandemic to seriously raise the bar in terms of adaptation of technology are Carrefour and Lulu. Noon is catching up fast. The Government of Dubai, which runs as a large corporation, continues to remain at the Number 1 spot.
Amazon entering the brick-and-mortar space and the new shopping experience that customers will want after the pandemic is over are significant forces that could change the face of shopping.
Maybe a Noon could break the barrier, and we could see a few large format Noons across the region.
Retail spaces may never be the same again. We have truly interesting times ahead.
About the author
Niranjan Gidwani is a Consultant Director and a Member of the UAE Superbrands Council. He is the former CEO for Eros Group Dubai. He has over 38 years of hardcore senior management experience with a strong exposure to handling international business. During these 38 years, he has worked in India, Hongkong, Germany, Singapore and Dubai.