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Alexandra Biesada

Has Retail Reached a Tipping Point?

by Alexandra Biesada | Dun & Bradstreet Editor

December 22, 2015 | No Comments »

Barnes and Noble book storeAs if there were any doubt about where retail is heading, the 2015 Thanksgiving weekend provided the definitive answer: online. Of the more than 151 million people who said they shopped over the four-day holiday, fewer than 102 million shopped in stores and more than 103 million said they shopped online, according to the National Retail Federation’s Thanksgiving Weekend Survey. The preference for online shopping was especially pronounced on Thanksgiving Day, when nearly 40% of adults 18 and older shopped online compared with 34% opting to visit stores, the NRF reported.

Another analysis of Thanksgiving weekend shopping trends found that online retailers’ holiday sales increased 15% to 16%, while in-store sales for the same period declined 4.7% to 10%. And digital dominance over brick-and-mortar shopping is expected to continue throughout the 2015 holiday shopping season, according to analytics reports from Adobe and RetailNext.

While stopping short of calling 2015 a “tipping point,” analysts say there’s no doubt that retail is in the middle of an incredible revolution and evolution.

What’s a store owner to do?

If you’re Urban Outfitters, you’d buy a restaurant chain to diversify and experiment with putting restaurants in stores, hoping that diners will feel like shopping after they eat. Battered bookseller Barnes & Noble is relying heavily on in-store activities, including a recent three-day Mini Maker Faire, Vinyl Day, and Saturday coloring events to draw traffic to its stores (and hopefully sell books and, increasingly, other stuff). To entice holiday gift givers, the bookseller is airing a spot featuring Lady Gaga and Tony Bennett browsing the aisles and the slogan “You Never Know Who You’ll Meet at Barnes & Noble.” The message is clear: Shopping is social, so tear yourself away from your mobile device, leave the house, go shopping, and meet someone!

To trump the convenience of online retail, physical stores must focus on improving the in-store experience. At minimum, physical retailers must ensure that shelves are well stocked, displays attractive, and salespeople available and knowledgeable. To ensure customer loyalty, the bar is even higher. “Driving a meaningful retail experience is all in the execution — surprising and delighting customers at every touch point,” according to RetailingToday.

With so much attention given to digital dominance, it’s important to remember that online as a percentage of retail sales in the US was just 7.4% as of the third quarter. In fact, the US lags both China and the UK (each approaching 14%) in the percentage of sales conducted online. With more than 90% of retail sales on the line, brick-and-mortar stores must execute or slowly wither away in empty, decaying shopping malls.

It’s a safe bet that, come January and retailers report their 2015 holiday sales, merchants that delivered compelling in-store experiences will outperform those who lacked inspiration.

Check Bizmology in January for a look at the year’s retail winners and losers.

Alexandra Biesada shops every day, whether she wants to or not, and pines for the days when it was strictly a recreational activity. She has covered the retail beat for Hoover’s since 2001. Follow her on Twitter.

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