With the threat of replacement by Amazon looming over the heads of retailers all over America, brick and mortar stores are turning to new technologies to create experiences that can’t be replaced by online shopping, according to a report by CB Insights that detailed how retailers could survive the e-commerce induced apocalypse.
For example, Ikea partnered with Wavemaker, a media and technology agency near Dallas in December to offer virtual reality games and experiences to customers who enter the physical store.
About 300 people have experienced the technology, which lets them play games of “pillow toss” or chill out with VR panda. With this experiment, Ikea was looking for ways to get a better understanding of what tech-based experiences would bring customers through the doors, but also offer a broad introduction to the overall brand of Ikea for new customers.
However, the necessity of such innovations is deeply evident. Retailers have every reason to sweat, given the high victim count of the retail apocalypse. Nearly 7,000 stores shut down in the United States last year. E-commerce sales growth is surpassing total retail sales at 17% compared with 6% year-over-year per Q4’17. Amazon remains dominant online, making over 40% of online retail sales in the US, per the US Department of Commerce and Slice Intelligence.
Not everyone has the resources or the vision to create a viable in-person experience to compete with Amazon’s success. Many formerly powerful retail entities such as Toys R’ Us, Sports Authority, and Radio Shack have buckled under pressure from a consumer preference for e-commerce and mounting debt from buyouts leveraged during the post-financial crisis.
There are opportunities in every crisis, as a crew of startups that aim to help brick and mortar stores has emerged to assist physical retailers, helping them in categories ranging from inventory management to monitoring shelves, and developing delivery services in some cases.
But the big trend in brick and mortar retail is self-reinvention, with Best Buy joining Ikea in innovation. The electronics
retailer is focused on developing a deeper relationship with its customers. The company has announced a “growth phase” given the moniker “Best Buy 2020.” Its mission is to “build more predictable revenue streams from recurring revenues and stickier customer relationships,” reports Business Wire.
One service Best Buy has recently launched is its in-home consultation service. In this program, sales representatives will perform free in-home consultations to customers who need a little help revamping their homes in terms of electronics and entertainment systems. However, this isn’t a cure-all to their woes, as Amazon launched at-home tech consultations and installations last year.
What the Future Looks like for Retailers
Despite the need to evolve, sectors of retail are growing, which means death has not yet arrived. However, given tremendous pressures, the nature of brick and mortar stores is going to go through a dramatic evolution.
“I think the day of the pure-play [retail] is dead … Consumers want that choice — they don’t want companies’ operational complexity thrust upon them, pushing them to only one way to do business,” said Liza Landsman, Former President of Jet.com.
So far, the trajectory favors retailers who deliver seamless experiences where all their platforms are integrated, and enhance consumer experiences.