Why Retail Businesses Need A Brick And Mortar Presence (Even In The E-Commerce Era)
Given the headline of this piece, before readers start sending in comments that I am out of touch with reality, or that I am living in the 19th century, let me hereby make the statement that I love technology. I embrace it, and I have been an early adopter of all things digital. If it has a LED screen on it, then I have probably owned it, its prototype, and I will probably be first in line to buy its successor as well. The older readership might remember the Apple Newton from 1994 –the forerunner to the iPhone and iPad- I bet that very few of you saw one, let alone own one, but well, I did. This will therefore make my next comment on the retail landscape sound quite contradictory of my feelings on technology, but let me say it anyway: e-commerce or social selling is not the be-all and end-all of retailing. While e-commerce, especially in the MENA region, is growing exponentially with every second person wanting to be a digital entrepreneur, people should not forget that the ultimate way to build a brand is to allow the consumer or potential customers to see it, feel it, smell it– quite simply, to experience it.
E-commerce might afford numerous benefits such as cost efficiencies and market entry in a far quicker manner than traditional retailing channels, but there are pockets of the economy that will need -and always depend on- the brick and mortar retail stores. Detractors from this statement will point to traditional retailing sectors such as fashion, and point to the success of Net-a-Porter and other online fashion sites. To this, I would concur and state that these e-commerce portals are wonderful for established brands where the consumer knows what he or she wants, but what about the up-and-coming designer that no one has ever seen? Where does he or she show off their creativity, and allow the customer to discover their talents?
Over the past 12 to 18 months, I have been working to build my skincare brand, Herbal Essentials, while competing with established, better-funded brands. As a result, I have been amused to receive various snippets of well-meaning advice, all geared at becoming a digital entrepreneur: “Launch your e-commerce platform, and sell through that, as it will increase your brand reach and valuation.” (A note here: people here often seem obsessed about valuations, which don’t really mean anything to an entrepreneur whose business is not for sale. For the record, though, yes, we at Herbal Essentials are “online,” and we offer worldwide shipping as well.)
But the point I wish to make here is that when it comes to smaller brands or early-stage businesses, please do not forget to allow the customer (who is the ultimate judge on whether you will succeed or fail) the opportunity to experience your products and services. For many businesses, this means giving them the opportunity to experience the brand in a live format. I can’t help think that people seem to forget that some businesses –such as fragrances, fashion or skincare– need the end consumer to feel the texture of the product, smell the fragrance note, try on the dress or shirt, and consult with a retail advisor on how to fix that irritating skin concern. Until the digital world can figure out how to teleport what I call this real-world experience through a mobile device or tablet, then the case for brick and mortar stores will always exist. E-commerce isn’t the sole way for a brand to grow.
Entrepreneurs and startups need to remember this point, and then follow a strategy that compliments how best they can reach and interact with their customers. I am willing to place a large wager that they would or could develop a deeper “consumer relationship” with human interaction and old fashioned customer service, than by an app on their mobile device. The fact that e-commerce portals in North America that have grown into giants with amazing valuations on the strength of their digital reach like Warby Parker, Amazon and Birchbox to name but a few, are all opening, or have opened, physical retail stores helps to make my point. The lesson here is that for smaller brands or newcomers trying to enter the market, scale, and develop a loyal customer base, there is no substitute for a superb retail experience, and for people to feel your product up close and personal.
But don’t get me wrong: if you know you need to buy a specific brand or item, and want to stick to what you have always purchased, then e-commerce is wonderfully useful and a great way to make repeat sales. Souq, MarkaVIP, JadoPado and other regional e-commerce portals are great businesses (as Noon will be too), and there is no doubt established brands will focus on these portals in the months and years to come where efficiencies and rent savings can be passed on to the consumer. The potential loser in this triangle will be the traditional retail landlords who for many decades have been dependent on the same brands opening stores in multiple locations. How many malls in the UAE carry the exact same big name shops as other malls? With the advent of e-commerce, this will change. Smart retail landlords in the UAE and GCC, who understand this and can see the seismic shift in channel strategy that is about to happen should seek out smaller niche brands offering them discounted or cheaper rentals to lure them in and retain footfall and interest from consumers. A potential alliance between smaller niche startup brands supported by the retail landlords could be an interesting alternative to the big brands going online.