Offline goes online, online goes offline, and sometimes, offline just goes away

In the past decade, shopping behavior has changed significantly, with more and more people choosing to shop online for goods and apparel. While online retailers have typically remained online, many see the potential for expansion through brick-and-mortar retail. The past two years have seen an unprecedented convergence of online retailers moving offline – seeking an omnichannel presence and getting closer to where their consumers are. The trend goes the other way as well. Traditional retailers are feeling the strain of increasing online sales and are pressured into finding solutions that fit the needs of the consumer that’s shopping online. Retailers are making moves to position themselves on both sides of the coin.

Offline Goes Online

In addition to building out their own online presence, many big box stores are acquiring online-first retailers to get in the online game and tap into those increasing sales. By doing so, not only are they investing in the business, but with it comes a community in a typically younger demographic that have become loyal to these brands since their start.

• Walmart acquires Jet.com and most recently, ModCloth, the innovative fashion line, and has established an incubator called Store No. 8 to develop proprietary technologies
• Bed Bath & Beyond acquires One Kings Lane, the online home goods retailer elevating design
• Nordstrom acquires Trunk Club, the subscription service to make shopping for fashion as easy as ever
• Owner of Lord & Taylor and Saks Fifth Avenue, Hudson’s Bay acquires Gilt, a website to shop apparel and accessories
• Target was working on a “Store of the Future,” but they’ve recently shut the project down, which makes you wonder where they’ll put their innovation investments next

Online Goes Offline

On the flip side of the coin is Amazon. Not only is Amazon the leader in online retail (accounting for up to 38% of online holiday sales by some estimates), they are now taking steps to start to build out a physical presence as well. If things are going so well for Amazon online, why would they want to open stores? An understanding of their consumers and behaviors through massive online data has led to deep insight into how people will shop in physical stores. They’re delivering a different kind of experience that offers curation, discovery, and sociability unlike their online experience. By opening physical locations, Amazon draws itself even closer to where consumers are.

Amazon Go, the convenience store that lets you “just walk out” without standing in line to check out, still in beta

• Amazon Campus, the college campus store that serves as a package pick up and drop off with a dozen locations, priming college students early for Prime memberships, a huge revenue model for the company
• Amazon Books, which already has a handful of spots including Dedham, and more locations planned including Lynnfield
• AmazonFresh Pickup, a drive-up grocery store

Offline Just Goes Away

Companies that rely too heavily – or solely – on their physical store operations are failing at an alarming rate. Without adapting to changing consumer behaviors, they’ve missed the opportunity to survive and thrive in today’s market.

• Macy’s closed dozens of stores last year and will close another 100 locations, out of its 675 current stores
• Sears is on the brink of bankruptcy and will close 42 stores as well as 108 K-mart stores, which it also owns since their 2004 merger
• JCPenney will close at least 130 stores this year

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