For those who believe that ecommerce will be the downfall of the bricks-and-mortar store, you better think again, according to Toys R Us Chairman and CEO Jerry Storch.
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In his keynote address at the National Retail Federation’s Shop.org Summit in Denver, Storch debunked the myth that Internet shopping means the demise of the brick and mortar store due to the fact that traditional retail stores just don’t make a lot of money.
“Today is a call to action to take back our manifest destiny. Retail is not dead,” Storch said during his. “Stores make money and they make a lot of money.”
If you close a traditional store in order to focus more on that ecommerce site, you are closing your doors on a core audience of brick-and-mortar shoppers, Storch said.
“While there has been much focus on online only shopping, and our own ecommerce sites have grown to a $1 billion business, the reality is that the vast majority of sales will still occur in physical stores,” Storch said.
Shipping is expensive
While shopping online is convenient, it is actually cheaper to do it in store. Ecommerce shipping, or as he called it, “Direct to Home”, is much more expensive than retail stores. In fact, Storch said, the pick and pack costs that a direct-to-home ecommerce company has to endure are nearly 2% higher than a brick-and-mortar store.
For those shipping freight, Storch said, it is 30%-40% more expensive than fulfilling that order in an actual store.
Don’t expect free shipping to automatically boost sales either, Storch cautioned, “Somehow, somewhere and someday” that shipping bill has to paid and it will be at the cost of the ecommerce company.
Bricks-and- mortar experience
The experience inside a store just like Toys R Us trumps the environment of shopping online. “Stores have the advantage and they have the store experience,” Storch said.
Bricks-and-mortar stores are local; it offers the customer a sense of immediacy and can boost that beloved impulse buy. The traditional retailer store can give customers something etailers never can: the ability to actually touch, look and test out a product before it’s purchased.
In order to be a thriving brand in general, Storch said, you will have to offer the best products and services across all channels.
In fact, he said, the future of successful retail cannot just be about the power of the web, instead, retailers need to focus on integrating stores, internet, mobiles and social components together.