Why Are Brick & Mortar Stores Failing and Can They Be Saved?

Updated on July 25, 2018
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Cleo Addams is a published author. In her free time, she enjoys researching and writing articles on various topics.

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The internet is growing larger every day providing consumers more and more places to buy their goods. But, while online sales are booming, some traditional brick and mortar stores are taking a hit.

Circuit City, Radio Shack and Kmart are just three of many stores that have filed bankruptcy and felt the pressure of competition from online retail giants such as Amazon.com and Walmart.com.

In this article we'll address why this is happening and if traditional stores can really be saved.

Online Shopping Is Attractive for Many Reasons

Convenience & Product Availability

The top reasons that many people shop online is convenience and product availability.

A quick search on Amazon will bring up exactly what you're looking for the majority of the time. In fact, an average of 1.3 million new products are added each day increasing the likelihood that what you want will be available on the site.

Currently, Amazon's largest category of items is electronics. In 2017, there were over 91.8 million products in this category alone, with cell phones being the top subcategory coming in at 59.88 million.

And, if Amazon doesn't have what you need, then a quick Google search will locate the item at another online outlet rather quickly.

Unlimited Stock & The Ability to Compare Prices

If you need a computer, a traditional store may only offer a few brands such as HP, Dell, Lenovo and Mac in select models because space is limited. If you shop online, you can compare many different makes and models to find the best deal and the web store can drop ship products from multiple warehouses.

Many brick and mortar stores like Best Buy also offer online only items and deals on their website, but I find that their prices are still way outside the range of items available at other online outlets.

Coupon Codes & Loyalty Points

I like to be a thrifty shopper, so when I find a coupon for something that I use regularly, I make sure to snatch up the item before the coupon expires. Unfortunately, (thanks to shows like “Extreme Couponing”) many brick and mortar retailers now offer even less discounts and coupons for their customers.

When shopping online many websites offer free shipping for new customers or if your order meets a set dollar amount. There are also coupon websites like RetailMeNot.com where you can find a coupon code for just about any shopping site on the web. Some sites even offer loyalty points to their customers that add up to discounts and even free items.

No Sales Tax

Many online sites still do not charge sales tax. In fact, if the business does not have a physical presence (or nexus), then they are not required by law in the United States to pay sales tax.

Same Day Delivery

Retail giants such as Amazon are now offering same day delivery in certain metro areas. You simply place your order by noon and it's delivered to you no later than 9 P.M. It's quick, easy and frees up your time so that you can focus on other things.

Did you know?

In the 4th quarter of 2017, Americans spent 99.4 billion shopping online.

Source

Can Brick and Mortar Stores Really Be Saved?

I believe that traditional brick and mortar stores can be saved, but they will have to ultimately look at the way that they do business and make the shopping experience more appealing (and easy) for their customers.

The following are things that I think traditional stores should focus on to keep themselves competitive and relevant in the marketplace.

Better Customer Service

When I think of customer service Walmart immediately comes to mind. There have been many times that I needed help and an associate was nowhere to be found or just didn't seem interested in helping me.

I think retailers should invest in yearly customer service workshops for their employees. Also, an associate should be available at all times in their designated area in case a customer needs assistance or has questions.

Product Should Be Pulled Promptly

Okay, so I've finally located a store associate to help me in the Electronics Department. I've picked out a television that I like and there's none available on the floor, but they offer to pull one from the back. Great, now I will have to wait an hour for someone to pull my TV. In fact, I've waited several times for an associate to pull stock from the back of a store and it was never a speedy process.

Luckily, there's an easy fix to this issue. An employee should be assigned to the warehouse and pull the product promptly upon request. If an employee is not needed for this task full-time, then floor associates can rotate weeks or days pulling product from the back as requested. Again, this should be speedy. The customer should not have to wait more than 15 minutes for someone to pull a product.

Keep Prices Competitive

Big retailers should attempt to price match with online products. For example, if a customer finds a laptop computer on Amazon for $499 and Best Buy has the same exact computer for $599, then more-than-likely Amazon will get the sale. The only downside is that the customer has to wait for Amazon to ship the computer to them, and even with Amazon Prime it will take two days to get there. The two day wait is unappealing to this specific customer because the hard drive in their old computer failed and they need the new one as soon as possible for a school paper due by the end of the week.

If Best Buy would price match Amazon's price, then the customer could have the product the same day and more-than-likely not mind paying the sales tax. That would be a win-win situation for the customer and the retailer.

(I worked in a call center for nine years and it's been my experience that customers don't mind paying a little extra for convenience.)

Offer Better Quality Products

Brick and mortar shops should attempt to source some products locally with higher quality instead of importing them from overseas. Products made in China are definitely cheaper, but the quality usually suffers and the item only lasts a short amount of time for the consumer before they have to buy another one.

For many years, traditional stores relied on their quality of goods, customer service and reputation to drive sales. Unfortunately, they've moved away from this over the years and it's definitely hurt their business.

Consumer Loyalty Programs

Stores should offer credit cards and/or loyalty cards to bring in business and repeat customers.

A great example of this is Kohl's. Kohl's is an American department store that offers continuous sales on all it's stock. They also offer many credit card promotions and have a loyalty program as well.

Kohl's customers can often get an additional discount off their total purchase price if they charge it. Also, consumers can accrue loyalty points that add up to discounts over time.

These type of programs bring in new business and reward loyal customers. Every store should take advantage of these easy marketing tools for boosting sales.

Same Day Delivery

Just like Amazon, brick and mortar stores need to offer a same day delivery option to their customers. Traditional stores can easily partner with popular ride-share companies such as Uber or Lyft for fast product delivery.

It's Never Too Late for a Change

It's not too late for brick and mortar stores to make a turn around in the retail market. If they follow trends and make shopping more appealing and convenient to consumers, then there is a future where online and traditional stores can both turn profit without threatening the business of the other.

References

  • Statista, Desktop Retail E-Commerce Spending in the United States from 1st Quarter 2007 to 4th Quarter 2017 (in Billion U.S. Dollars), https://www.statista.com/statistics/276387/quarterly-us-retail-e-commerce-spending/, Accessed 7/14/18
  • Wikipedia, Circuit City, https://en.wikipedia.org/wiki/Circuit_City, Accessed on 6/2/18
  • ScrapeHero, How Many Products Does Amazon Sell Worldwide – October 2017, https://www.scrapehero.com/how-many-products-does-amazon-sell-worldwide-october-2017/, Accessed 7/8/18
  • ScrapeHero, How Many Products are Sold on Amazon.com – January 2017 Report, https://www.scrapehero.com/how-many-products-are-sold-on-amazon-com-january-2017-report/, Accessed 6/2/18
  • TurboTax, Sales Tax 101 for Online Sellers, https://turbotax.intuit.com/tax-tips/self-employment-taxes/sales-tax-101-for-online-sellers/L4uTQCaIx, Accessed 7/8/18
  • Kim Komando, Top Things You Need to Know About Amazon's Same-day Delivery, https://www.komando.com/tips/323474/3-things-you-need-to-know-about-amazons-same-day-delivery/all, Accessed 7/13/18

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    © 2018 Cleo Addams

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