While the long-predicted demise of the bricks-and-mortar store has been greatly exaggerated, there is no doubt that customers are migrating to digital channels in growing numbers.
Accenture looks at the issues, and identifies three steps that retailers can take to rethink the way they attract, serve and retain customers, then allocate capital and resources accordingly.
Since the late 1990s e-commerce boom, analysts, investors, and technology purists have been predicting the end of bricks-and-mortar retail. And while these predictions were greatly exaggerated, the fact is customers continue migrating rapidly from physical stores to online and mobile channels to fulfill their shopping needs.
Consequently, the online and mobile channels, once merely a supplemental revenue stream for traditional retailers, are now a bona fide force that is wreaking havoc on physical store sales productivity. In fact, Accenture’s analysis of 29 top U.S. retailers reveals that from 2005 to 2010, total square footage and stores in operation increased by 38 percent and 21 percent, respectively, while sales per square foot has actually declined 5 percent. And these less-productive stores are affecting the bottom line. Return on invested capital for the same set of retailers during the same time period also declined 25 percent.
Given these trends, the evidence is clear that the majority of traditional retailers today are overstored.