Clicks-to-Bricks: Omnichannel Retail a Threat to Online-Only
By now, news of “retail disruption” and “the decline of brick-and-mortar” has reached even those outside the retail industry, and you could be forgiven for thinking the online retailer model might be the next new dominant force after reading all the fretting thinkpieces of the past few years.
Amazon’s Clicks-to-Bricks Path
Amazon’s much-discussed acquisition of Whole Foods is one canary in the coal mine. After initial reporting crowed another triumph of the online over physical stores, subsequent coverage has allowed a more nuanced picture to emerge. Despite the company’s status as arguably the largest and most powerful e-commerce entity on the market, Amazon’s previous forays into the grocery delivery business have fallen flat without local brick-and-mortar solutions. The recent merger highlights the real-world limitations large online-only retailers are beginning to confront as the overall field of play for retail becomes more complex.
Strong Physical Retail Chains Dominate
The shift is about more than just Amazon. Aside from the online giant, the top ten retailers in the U.S. are still all primarily physical chains, and their sales growth remains strong. This is informing the omnichannel revolution as more traditional chain retailers either launch their own online store counterparts or purchase struggling online-only retail businesses to augment sales. Traditional large retailers like Wal-mart, Hudson Bay Co., and Bed, Bath & Beyond have all expanded their physical store brands by using their purchasing power to acquire struggling but high-profile online-only businesses.
Digital retailers may seem to have less overhead than brick-and-mortar stores, but with added shipping costs, warehouse costs, and other profitability challenges faced by online operation, online retail destinations are beginning to show signs of weakness.