Can E-Commerce Save Retail?
Get physical, social, and digital. It's time to integrate.
In the span of a few short weeks, the coronavirus pandemic completely reshaped shopping and left many retailers struggling to survive. Neiman Marcus, JCPenney, J. Crew, and other popular chains filed for bankruptcy. According to a report from Yelp, 60 percent of listed businesses that shut their doors during the pandemic have closed for good, including 48 percent of retail stores.
At the same time, the crisis is opening up opportunities for retail to evolve. It has disrupted when, where, and how people shop, creating space to rebuild and reimagine relationships with customers. Three-quarters of consumers have tried a new shopping brand or method since the pandemic started, and most plan to continue it going forward.
As companies try to navigate this new landscape, many business leaders are placing their hope in online shopping to help them reach customers in the era of social distancing. But is e-commerce enough to rescue retail? My years of research on shopping and customer experience suggest that digital technologies alone are not the savior of retail some have made them out to be. Companies must integrate the digital, physical, and social aspects of shopping to satisfy the majority of their customers.
The three faces of shopping: digital, physical, and social
A digital presence has certainly been a boon for retailers in recent months. Online grocery sales surged to $7.2 billion a month this summer, up from $1.6 billion last summer. Consumers have eagerly experimented with new shopping methods like curbside pickup and delivery apps. These adaptations build on existing trends, as retailers have been moving further into the digital realm for years. Yet my research suggests that, for many customers, digital can never fully replace the social and physical aspects of shopping.
Even in the midst of a pandemic, people want to physically experience many kinds of products before committing to purchase them. Shoppers want to touch fabrics, assess colors without the filter of a screen, and test the comfort of furniture. Stores know this and are doing everything they can to get customers back in the door, from mask requirements and fever checks to shopping by appointment. As they stress cleanliness, close fitting rooms, and discourage touching the merchandise, stores are taking a page out of the Zappos playbook and extending return policies so people can get a feel for the products at home.
Shopping is also an intrinsically social activity. People browse stores in groups, peruse online reviews from fellow customers, and text their friends for advice on what to buy. Customers “co-create” their shopping experiences through interactions with employees, forming relationships with their favorite barista or store clerk. While some of the social aspects of shopping now happen online – from Yelp reviews to “unboxing” videos – they remain rooted in experiences with real people and products.
The importance of integration
The best way for companies to please the most customers is to integrate the physical, social, and digital aspects of shopping. This is particularly important in a time of crisis when many consumers are seeking reassurance and security. As retailers rush online in response to social distancing, they shouldn’t ignore the need to restore trust and rebuild relationships with customers that have been disrupted by the pandemic.
Successful integration is why Best Buy has been able to weather the coronavirus pandemic with minimal damage, maintaining around 80 percent of its sales compared to the same time last year. Over the past decade, the company defied expectations that it would be destroyed by Amazon and other online retailers by strengthening and coordinating its presence in the digital, physical, and social realms.
Best Buy introduced its popular Geek Squad support staff and launched an app with social components such as the ability to access live support and make appointments. The company linked warehouse and store inventory so that local stores can fulfill online orders (a practice known as “webrooming”) and hired in-store consultants to help customers discover products on site and then buy them online (known as “showrooming”). They also began offering free in-home consultations to build trust in their brand and become the preferred supplier.
These features helped create strong, faithful relationships with customers who don’t want to navigate electronics purchases alone – even during a pandemic. At the start of the nationwide lockdowns, Best Buy moved all its stores to curbside pickup, an easy switch given their integrated inventory system. Even as they furloughed over 50,000 employees, the company retained the vast majority of their In-Home Advisors and Geek Squad Agents, who serve as brand representatives and key contact points for customers.
Best Buy’s integrated strategy has served them well during the pandemic, helping them stand out against competitors that are more heavily digital, like Amazon, or have a weaker online presence, such as local appliance stores. Their experience shows that digital technology can be most effective when it serves as a complement to physical and social interactions, rather than trying to replace them entirely. For example, their app allows customers to digitally access live support, but it comes from a person, not an AI chatbot. Rather than funneling customers solely into online purchasing, they offer the choice to mix and match where items are discovered, purchased, and delivered – at home, in store, or curbside.
The limits of a digital-only strategy
As the pandemic has shown the value of an integrated strategy like Best Buy’s, it has also demonstrated the limitations of operating primarily online. Airbnb, for instance, has struggled to reassure customers it’s safe to stay in the home of a stranger right now, and the digital-forward company has little control over the customer experience on the ground. Meanwhile, traditional hotels have capitalized on their physical presence and longstanding relationships with guests to reassure customers.
Marriott, for example, launched a Global Cleanliness Council to develop new cleaning procedures for its properties and instituted requirements for all guests and staff to wear masks in public spaces. They released a suite of digital tools to help event organizers looking to host conferences safely. Their latest marketing efforts highlight the interconnection between the digital, physical, and social elements of their business, featuring montages of employees cleaning hotel properties, guests using technology to maintain social distancing, and narration from chairman Bill Marriott himself.
Marriott is drawing on the social and physical aspects of its business to reassure customers in a way that companies that live primarily in the digital realm would struggle to achieve. While bookings are still down, they have begun to bounce back and the company recently announced that it is optimistic about what the future holds.Digital technologies have been essential for retailers to adapt and survive during the coronavirus pandemic. Yet just as a Zoom call isn’t a perfect substitute for a night out with friends, retailers need to balance how to benefit from digital technologies while maintaining the sort of warm, tangible, personalized experience that builds brand loyalty. As they are pushed to incorporate technology more quickly than expected, retailers should work to integrate the digital, physical, and social realms, as this is where the future of retail truly lies.
Entrepreneur Leadership Network Contributor