The events of the past few years have forced an unprecedented acceleration of e-commerce, leaving many to speculate about the death of physical retail. However, contrary to the predictions of a “retail apocalypse”, what’s unfolding is quite the opposite. Consumers are beginning to crave the tactile and social experience of in-store shopping again. While brands pivoted their focus to online during the pandemic, we’re seeing a shift back to brick-and-mortar.

Overseas pure play e-commerce giants like Amazon and eBay have invested significantly in brick-and-mortar. Closer to home, a Lightspeed report found 76 per cent of Australians shop in-store at least once a month, with 56 percent visiting brick-and-mortar stores to see, touch, or try on products in real life before purchasing.

In New Zealand, JLL’s Market Dynamics report for the second quarter indicated a recovery in prime retail areas in Auckland, Wellington, and Christchurch. “All cities have experienced significant leases recently completed, highlighting the continuing demand from luxury/premium retailers for prime locations. In Auckland, large-format retail has had $66.46 million in sales transactions this year,” the report states. The resilience of retail was also echoed by CBRE NZ, which noted that the retail sector’s demand, particularly from food and beverage and sports-related retailers, remains strong, with vacancy rates in key shopping areas returning to pre-pandemic levels.

The Evolution of Brick-and-Mortar

In-store shopping is having a resurgence but how consumers shop has fundamentally changed. Klarna reports that 86 percent of New Zealand shoppers initiate their store visits online and 69 percent continue to use their smartphones for research while in-store, checking reviews and comparing prices. This highlights the hyper-connected relationship between digital and physical retail.

An Omnichannel Model is a Must

Many businesses have reported increased e-commerce sales following the opening of physical stores, while a strong online presence can also drive in-store traffic as customers look to try before they buy. It can be tempting to favour one channel over the other, particularly if historical performance has skewed one way. Unlocking success for brick-and-mortar lies in finding the right balance between both channels. An emerging concept is “phygital retail,” which encapsulates the seamless blend of physical and digital shopping experiences.

Here are some effective strategies to entice customers into store:

 BORIS (Buy Online, Return In-Store): With the increase in online shopping comes the challenge of managing returns. Many retailers now allow customers to return their online purchases in-store without return fees, encouraging additional in-store discovery and spending. In the same vein are initiatives like BOPIS (Buy Online Pick Up In Store) and BOPAC (Buy Online Pick Up At Curbside), which merge the convenience of online shopping with the benefits of in-store experiences.

Experiential Retail: While online retailers can range a larger inventory as they aren’t constrained by space, you can compete with this by providing unique in-store experiences that can’t be matched online. Consider hosting brand activations, engaging aesthetics that invite exploration, or in-store demonstrations – like ‘get the look sessions’ with a stylist or educational talks (e.g. demonstrating how to use device features).

Stock Availability: According to Lightspeed HQ, 42 percent of shoppers check online for stock availability before their in-store visits. This insight underscores the importance of retailers prioritising stock availability in-store.

Exclusive Promotions: Nothing beats a good deal. Executing in-store exclusive deals, marketed via social media and email channels, can attract online shoppers to your physical location.

Buy Now, Pay Later: Many opt for online shopping for the flexibility of buy now, pay later programmes. Promoting these offerings in-store can help to enhance foot traffic.

As we look to the year 2025, it’s crucial to focus on the evolving role of brick-and-mortar. The successful retailers of the future will embrace the interplay between digital and physical retail. In doing so, brick-and-mortar will not just survive but thrive.