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Brick-and-Mortar Stores to Remain Cornerstone of Retail, Study Shows

07/24/2014 | By Sarah Borchersen-Keto

Brick-and-Mortar Stores to Remain Cornerstone of Retail, Study Shows

Brick-and-mortar stores continue to be customers’ preferred shopping channel, and are crucial in generating online sales for retailers, according to a new study by global management consulting firm A.T. Kearney.

According to A.T. Kearney analysis, 90 percent of all U.S. retail sales in 2013 were transacted in stores, and 95 percent of sales were accounted for by retailers with a brick-and-mortar presence.

A strategy based on leveraging the appeal of the physical store, supported by digital, “is the best formula for capturing the maximum number of sales, building sustainable customer loyalty, and creating opportunities to cross-sell,” Michael Brown, A.T. Kearney partner and one of the study’s three co-authors, said.

The study found that most shopping experiences are processes that involve multiple steps, such as researching, purchasing, and possibly returning a product. Consumer preferences vary according to the different stages in the shopping process, A.T. Kearney noted, but there is a preference for brick-and-mortar stores at each step.

According to the study, two-thirds of customers purchasing online used a physical store before or after the transaction. The store makes a significant contribution to generating the sale, even though the transaction is eventually registered online, the A.T. Kearney study noted.

Mike Moriarty, A.T. Kearney partner and co-author, said retailers need to be aware of the role physical stores play in brand-building and product awareness, “as they consider resource allocation decisions across channels to ensure that the true value the physical store creates is accounted for properly.”

Andres Mendoza Pena, A.T. Kearney principal and co-author, observed that the level of understanding among retailers about the need for a physical presence varies.

“Some of them are really attune with the consumer, and have come to the realization that the key to success is to understand what consumers prefer, and serve their needs,” Pena said.

He added that it is a matter of time before more retailers become aware of the benefits a brick-and-mortar presence provides in their overall merchandising strategy.

“As technology continues to enhance the capability to understand consumer behavior… retailers will come to realize the relevance of physical retailing and how powerful it is when supplemented with digital,” Pena said.

Art Coppola, Macerich (NYSE: MAC) chairman and CEO, said the A.T. Kearney study "completely validates everything that we know from being in the mall business for 40 years, and everything that we know from talking to retailers about their strategy." Brick-and-mortar is the "absolute cornerstone" to their omnichannel strategies, he said. Coppola added that physical stores offer "the most experiential opportunity for retailers to communicate with their consumer and it's the most profitable venue for them to sell merchandise."

The A.T. Kearney Omnichannel Shopping Preferences Study: http://www.atkearney.com/consumer-products-retail/on-solid-ground, was based on a survey of 2,500 U.S. shoppers that asked respondents about their shopping preferences and behaviors. The survey covered all age segments.

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