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Insight

A message from the chairman: The symbiotic relationship between brick-and-mortar and online retail

November 2, 2018

The media is full of stories about how online retail has had a profound effect on the offline shopping habits of consumers today. However, there is an emerging story that deserves equal attention—how physical stores help create and increase online sales.

Put simply, brick-and-mortar stores drive digital engagement. That’s the big takeaway from a recent report from the International Council of Shopping Centers (ICSC), “The Halo Effect: How Bricks Impact Clicks.” Proving what many retailers have long known—at The Container Store we call it a “mutually supportive brand experience”—a brand’s web traffic and online sales performance is heavily influenced by the presence of a physical store. 

Retailers think of the selling experience in terms of customer “touchpoints.” The opportunity to leverage several selling channels—stores, direct-to-customer, mobile, online—promotes brand-building, better customer relationships, increased shopping trips and, ultimately, higher sales.  Creating ‘top-of-mind’ brand experiences for customers is the goal of optimizing a multiple channel strategy.  In this application, the halo effect is essentially “retail symbiosis”—the mutually beneficial relationship created by multiple brand exposure opportunities. Brick-and-mortar and digital retail are working in tandem to create customers and sales.

The ICSC study clearly shows that a brand’s online presence thrives when retailers invest in brick-and-mortar locations. When one opens a single location, web traffic increases 37 percent (on average) in the quarter following the opening of the store. Emerging retailers (less than 10 years old) get a 45 percent boost from a physical store opening; established retailers enjoy a 36 percent jump.

The opposite effect is also true: Web traffic drops when stores close. One example in the study cited a 77 percent fall in online activity following the closing of a brick-and-mortar location. At the same time, if a larger number of stores close, there is a proportionally large decline in web traffic where the stores are located.

Integrating the digital and physical experience is inspiring consumers to shop with confidence,  and will continue to do so in the foreseeable future. Digitally native retailers such as Casper, Carbon38, Untuckit, Warby Parker and TechStyle Fashion Group are steadily opening physical stores. Even Amazon, almost eponymous for digital retail, is planning to open 3,000 Amazon Go stores by 2021, according to media reports.

Today’s customers shop how, when and where they want. Technology and innovation will always be a part of retail, while physical stores create the strongest opportunity to build sustainable customer relationships and strengthen brand loyalty. The ICSC study is an important reminder of this as the halo effect reinforces the fact that bricks and clicks are not mutually exclusive.

Valerie Richardson, CRX, CLS

ICSC Past Chairman, Vice President - Real Estate, The Container Store, Coppell, TX, United States

Valerie Richardson, CRX, CLS, has over 35 years of experience in retail real estate, working for brands such as Trammell Crow Company, Ann Taylor, Barnes & Noble and most recently, The Container Store, where she has led the real estate team for 19 years. An active industry participant and advocate, Ms. Richardson was elected Chairman of ICSC for the 2018-2019 term, after having served on the Board of Trustees since 2004. She was the first ICSC Chairman to come to the post from an active retail company.

In her role at The Container Store, Ms. Richardson is responsible for site evaluation and lease negotiation, along with the coordination of store design and construction for the brand’s nationwide expansion program. She currently serves on ICSC’s Executive Board, its Nominating and Governance and Executive Compensation Committees and, until 2018, on the Board of the ICSC Foundation. She also serves on the Board of Directors for Kimco Realty Corp and served as a trustee at Baylor Scott & White Medical Center. Ms. Richardson earned an M.B.A. in Real Estate from the University of North Texas and a B.S. in Education from Texas State University. She resides in Dallas, Texas, is married, and has two children and one grandchild.

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