Online or Offline?

Everyone says that retail is dead

Last year, over 5,000 stores closed down in the US, with another estimated 7,000 to declare bankruptcy this year. Shopping malls across most of the developed economies of North America and Europe all look like ghost towns. In the Philippines, mall developers are experiencing high lease vacancies, the likes of which have never been experienced in an economy so strongly driven by personal consumption like ours. In the past decade, retailers like us would need to literally move mountains to find a suitable location for our retail concepts. And often times, because of the heated competition for space, we had to simply accept whatever was offered to us, never mind if what was available was at a blind corner or farthest away from the center. Today, many new malls have opened at barely 50% occupancy, a testament to the apparent over-supply of retail spaces in the country.

In the many retail classes I have taught, several aspiring retailers have asked me whether or not it is still wise to open a brick-and-mortar retail store, given the current industry situation. And would it be more prudent to start off selling online? Should they go online or offline?

The entire notion, however, that a company’s retail strategy should be built on either going online or offline completely misses the point.

Strengths of e-commerce and online retail

E-commerce and online retail does not exist to eliminate brick-and-mortar retail, and was definitely not created for that purpose. Likewise, any traditional brick-and-mortar retailer who decides to operate an e-commerce website to simply join the bandwagon is a sure recipe for disaster.

Online retail thrives on providing convenience to the customer. With just one click of a button, the customer has access to a wealth of information about the brand, product, or service. This same click of a button enables customers to have the same products delivered to their doorstep.

Strengths of brick-and-mortar retail’s business model

Brick-and-mortar retail’s business model, meanwhile, relies heavily on the strengths of human face-to-face interaction — on the power of excellent customer service. If presented and executed in a flawless manner, a retail store is a powerful shopping driver for the customer — from the storefront display, to the in-store visual merchandising, to the piped-in music and lighting, and to the general demeanor of the sales associate. But more importantly, it is human customer service that will always be brick-and-mortar’s competitive advantage. The power of verbal persuasive and suggestive selling, as well as the human emotions of excitement and empathy for example, are special traits that cannot — so far — be replicated by a computer. Artificial intelligence and data analytics have gone a step forward in understanding shopping behavior to cater product offerings specifically to online users. But nothing still beats the human touch.

The goal, therefore, of any new generation retailer is to study ways on how to upgrade the customer experience of traditional retail channels. Investing in store renovations, introducing digital innovations to enhance the in-store buying experience, and offering loyalty programs are some ingenious ideas to create excitement, but the most important investment will be in people, i.e. investing in customer service training.

Core strategy of Adrenaline Genius Lab

This is the core strategy of Adrenaline Genius Lab, and to all clients we service. Before introducing any revolutionary innovation into the retail strategy, stop and rethink first whether you have your basics covered. Essentially, the question to ask is how effective are your sales people in delivering the customary retail experiences that customers demand for?

This is what we firmly believe to be the key to survival of all retailers today.