How Brick and Mortar Affects Digital Sales

The halo effect on digital retail and what to make of it

Industry Trends
June 25, 2019

For all the talk about the “physical versus digital” in retail, there’s a more optimistic (and complex) truth: brick-and-mortar stores actually play a critical role in driving digital sales. 

The International Council of Shopping Centers (ICSC) studied the “halo effect”—when impressions created in one area impact another—and found that on average, brands experience:

  • A 37% increase in website traffic after opening a physical location
  • A 27% increase in web share within their market
  • A 4% decrease in web share within their market when a physical store is closed

The ICSC study also showed that physical locations demonstrate a positive impact on brand perception across all five measures of its health: awareness, impression, consideration, identification, and net promoter score (NPS). 

This research is borne out by the practical experience of digitally native retailers. Brands who entered the market as online-only merchants have steadily recognized that opening physical stores can provide memorable customer experiences, deeper emotional connections, and even higher sales through good old-fashioned foot traffic. The message is clear—physical locations affect a brand’s bottom line in more ways than increased overhead.

The secret: it’s not a competition between channels

Despite offering a world of options and the convenience of shopping from just about anywhere, e-commerce alone is not enough to allow a brand to succeed. So what gives? How is brick and mortar still making an impact in the age of digital everything

To answer those questions, let’s consider what benefits physical retail offers, and how it can complement (rather than compete with) a brand’s digital presence.

Research: Retailers with physical locations have long been expressing anxiety about “showrooming”: the phenomenon of customers researching a product in person, then leaving the store and making their purchase online. In a fascinating reversal, however, “webrooming” is now on the rise: customers are performing product research online, then physically going to a store to complete their purchase. 

Online research allows customers to walk into brick-and-mortar spaces well-informed and ready to buy, once their final questions have been answered. As a bonus, return rates of merchandise purchased in stores is significantly lower than returns of online purchases (Appriss).

Immediacy: Brick-and-mortar experiences cater to the urge for instant gratification in a way that simply isn’t feasible in the e-commerce space. One-day delivery can’t compete with the immediacy inherent in brick-and-mortar retail: a customer paying for and walking out the door with the exact product they wanted.

Diversity: The consistent nature of a brand’s online presence is often beneficial: customers get the same message, see the same products and prices, and experience customer service in a uniform way—until highly-sophisticated, algorithmic fine-tuning individualizes the shopper’s experience. Conversely, brick-and-mortar experiences are by nature more variable; while this is something of a drawback from a consistency standpoint, it also allows for customization at a regional and store-to-store level. 

Echoing the precision and personalization of online shopping, tuned-in retailers can optimize their physical stores’ product mix, merchandising approach, and customer service offerings in a way that best meets their customers’ needs. This allows them to avoid a homogenous, “all customers have the same needs” approach, which in turn makes for a more positive customer experience and increases brand loyalty. 

Certainty: For all of its convenience, online-only shopping presents the risk of two serious issues: shipping costs and the potential for package theft. According to the NRF’s Winter 2019 Consumer Insights report, a full 75% of customers expect free shipping for orders under $50, and nearly 30% will back out of an online purchase if the retailer does not offer free two-day shipping. 

Even with free shipping, the prevalence of “package piracy” means customers are still at risk of not receiving their order: one study found that 31% of Americans have experienced package theft, and 61% place blame on retailers (rather than shipping and delivery services) for not doing enough to prevent theft.

The rise of “click and collect” shopping—the ability to buy online and pick up (for free) in-store, whether hours or days after the order—is a boon for buyers and sellers alike. Customers get the free shipping they expect, and peace of mind knowing their package won’t fall prey to theft; retailers can leverage their existing distribution networks to minimize shipping costs while bringing foot traffic into their stores. 

Working together for the good of the brand

While the fate of traditional retail was uncertain in the early days of e-commerce, today it’s clear that brick-and-mortar plays a critical role in brands’ overall success. Online-only shopping offers convenience, accessibility, and lower overhead; physical spaces indicate legitimacy and offer unique opportunities for brand connection and customer service. Both channels are necessary for retailers who want to build a world-class experience for their customers.

Retail Zipline helps retailers’ brick-and-mortar locations adapt and communicate their strategies as quickly as they can online. Schedule a demo today to understand how easy it can be to test and change approaches in a flash, creating a seamless in-person experience to satisfy the digital pace of your customers’ expectations.