Amazon and Whole Foods: Why Retail Still Needs Brick and Mortar

June 19, 2017 Frank Grillo

 

Over the past few years, retailers have been increasingly focusing on optimizing their digital channels and online shopping experiences, while many have been closing their physical store locations. After all, brick and mortar is going by the wayside, right?

Wrong. While facing significant challenges, brick and mortar is far from dead or dying; on the other hand, it plays a key role in retail success.

As Steve Dennis recently explained on Forbes.com, we’re living in a time of “digital-first retail.” Many people begin their buyer’s journey online but make the actual purchase in a brick-and-mortar store. In fact, digitally-influenced sales that happen in store actually dwarf ecommerce. “While e-commerce now accounts for…some 10% of all retail sales, both Forrester and Deloitte have estimated that web-influenced physical store sales are about 5X online sales,” explains Dennis. And according to Deloitte, nearly one in three shoppers says they spend more when they use digital as a part of their shopping process.

In (Dennis’) other words, “Figuring out how to thrive, much less survive, in the age of digital-first disruption requires a lot more than shutting down a bunch of stores and getting better at e-commerce.” Successful brands like Amazon are realizing that they do, in fact, need the brick and mortar world. These brands are working to converge their digital and physical touch points into a singular, seamless shopping experience.

Why do brick and mortar stores still play such an important role in retail? There are two key reasons.

 

1. Brick and Mortar Provides a Tangible Experience

Amazon didn’t buy just any grocery chain or brick and mortar retailer; they didn’t want just another distribution center. Physical stores have the opportunity to give the consumer a real experience. They can tantalize the senses and truly allow a consumer to be immersed in a brand—which Whole Foods has done spectacularly well. The company pronounces it right in their core values: “We satisfy, delight and nourish our customers.” Describing waterfall display of 40+ apple varieties, this Washington Post article goes so far as to say Whole Foods is the most beautiful place in America.

Experiences are so powerful that brands like Samsung and justBOBBI at Lord & Taylor have been experimenting with “experience centers,” or shops where the experience is more important than a purchase. In fact, Samsung’s experience center doesn’t sell anything at all. Gabriel Mas, Director and Head of Marketing for Services & New Businesses at Samsung Electronics America, explained at a recent Harte Hanks Marketing Advisory Board meeting, that the goal of the “store” is for consumers to experience the best of Samsung.

 

 

As brands like these (plus Amazon) are noticing, there is real power in an in-person experience.

 

2. Physical Stores Smooth Critical Points in the Buyer’s Journey

In addition to delighting customers with an impressive experience, our research shows that brick and mortar stores also have some unique advantages at critical spots in the buyer’s journey. According to Katherine Lemon, Ph.D. and Professor at Boston College, “The new Amazon/Whole Foods combination offers exciting new opportunities for Amazon to significantly reduce friction in the customer experience on many dimensions and to create a seamless customer journey for all types of products—potentially services, as well.”

For example, when buyers need assistance determining which products might best fit their needs, physical stores can provide immediate help in the form of knowledgeable, face-to-face associates.

The recreational equipment company REI provides a perfect example of a store with expert staff that guides buyers along in their journeys. Go in looking for some new hiking boots? The associate gathers information from your level of expertise to where you’ll be hiking before providing recommendations for not only the perfect boots, but also the trekking poles you didn’t realize would be useful on your steep descents. Similarly, Whole Foods associates are likely to be able to direct you to a wild-caught, low mercury fish, suggest how to cook it and recommend which wines to pair with it to impress your date.

Another key stage of the buyer’s journey where brick and mortar stores excel is allowing consumers to physically evaluate the products. Try on the jeans or jewelry, feel the smartphone in your hand, test out the vacuum, smell the lotion or soap, etc. before selecting an item to purchase. There is no suitable online substitute (yet) for this type of in-person evaluation, and it’s a likely reason we see so many buyers visit a physical store after first browsing and researching online.

 

Any Brand Can Focus on Enabling the Buyer

When it comes down to it, no brand can sell to a buyer on its own terms. All brands can do is enable customers to shop in the way they want and provide them with a useful, pleasant experience while they do so—which will facilitate their movement along their paths to purchase.

Amazon’s purchase of Whole Foods helps them to accomplish both on an impressively large scale. But these strategies aren’t exclusive to retail giants; any brand can begin implementing them to provide the shopping experiences their customers desire. 

About the Author

Frank Grillo

Frank Grillo, CMO, brings creativity and an emphasis on customer centricity to the Harte Hanks brand. With more than 25 years of sales and marketing experience, Frank has helped many brands expand and transition their marketing strategies through periods of significant change, innovation and disruption in the marketplace. He is laser-focused on two of our clients’ critical needs—defining solutions for digital and data, and raising the Harte Hanks profile with external audiences like media, analysts and investors.

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