E-commerce trends fuel store openings

E-commerce charged ahead in 2020 and 2021, and yet for the first time since 2017 there are more stores opening in the US than are closing, which reflects a shift in how executives understand online retail: less like the Amazon machine, and more like distributed models common across Asia and Latin America.

Why it matters

The US tends to look inwards, but in the trajectory of e-commerce across chain businesses it can learn a lot from other parts of the world such as Magazine Luiza in Brazil, while at a broader level it is the combination of stores with online engagement options that are likely to drive the biggest chunk of growth in the next half decade for retailers.

The trend

Reporting in the Wall Street Journal links the result of researcher IHL Group’s report into 900 US chains – in which mass merchants, food, medicine and convenience retailers are all growing their physical footprint – with changing views about the role of the store.

Not only do they serve a crucial logistical purpose with collection and returns but they also fulfil a marketing purpose.

Effectively, the internet doesn’t work as the evangelists would have you believe; it’s no customer-finding panacea. Standing out has become harder and more expensive as the pandemic pushed most competitors online. And so traditional methods are not only continuing to show effectiveness – signalling your business’s seriousness with a well-fitted, well-designed store in a prominent location still engenders trust – but more flexible landlords mean retailers aren’t tied into potentially ruinous long-term deals. Rents are also around an eighth cheaper.

Key quote

“We get a bump online within a 10-mile radius of each store we open. Stores are like an inexpensive billboard” – Chris Riccobono, founder of online shirt brand Untuckit (which now has 88 stores and has plans for a further 62 in the next three years).

Sourced from the Wall Street Journal, WARC