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3 Eras in the Evolution of Brick-and-Mortar Retail to a Digital Future With a Happy Ending The goal is to make life a bit easier for customers, however they purchase from you.

By Brent Franson Edited by Dan Bova

Opinions expressed by Entrepreneur contributors are their own.

Thomas Barwick | Getty Images

Recently, The New York Times asked if retail was at a historic tipping point. It's a question that's been asked by others - I've seen similar pieces in The Atlantic and The Wall Street Journal. There's a reason for these articles: traditional retail is in trouble. Hemorrhaging jobs. Closing stores. Chapter 11s.

This is a time of great transition for retailers that were built for a pre-Internet era when the store was the only place a customer could buy. Those years were genteel, even quaint when we examine them in retrospect through our Snap Spectacles. Today, the traits for survival are very different than even 20 years ago.

To understand how these retailers will -- eventually -- adapt from dinosaurs to digital, let's take a fast tour of yesteryear from the vantage point of a big home improvement retailer.

Related: Technology's Daydream Is Becoming the Nightmare of Brick-and-Mortar Retail

The 80s: Build, baby, build!

Hello, heyday! If you're a big chain home improvement store, you're opening stores as quickly as possible. Why? You have literally everything going for you.

Customers who can only buy from you in one place: your store. A simple competitive landscape. Easy ways to target a potential store location by figuring out how far people are willing to drive, identifying competing hardware stores in the radius, and determining if the location is a good fit. Repeat that process approximately 2,000 times, building massive stores as you go. Sit back, watch the profits roll in. These are the good times.

The 90s: Isn't Amazon cute?

You're still going strong, making a dent in the mom-and-pop hardware stores and seeing the money roll in. You hear about a little website that sells books online going live. Interesting, you think. What's the name again, Amazon? I'll have to try it out. The World Wide Web is fascinating. You sense you should keep an eye on it, but the onramp to the information superhighway isn't apparent yet. Normal operational challenges and garden-variety headaches keep you occupied. It really is business as usual.

Related: The Winners and Losers in Amazon's Whole Foods Deal

The 2000s: Oh, man, we're so behind.

You look up and suddenly you see customers on newly launched iPhones. They're buying more than books from that once-cute little Amazon. Abruptly, your business is taking a bit of a dip as people no longer troop to your stores on the weekends. They're content to get their toolboxes, nails, sandpaper and lighting online. They can order a tablesaw between runs while skiing, confident in their purchasing decision with a quick scan of customer reviews and ratings. It'll be at their front door before they get back from their weekend in Aspen (they're Prime, you know).

Turns out your customers don't need loyalty as much as they prefer convenience. Your numbers are taking a dive. Your staff is wondering where to go from here. And now you're playing catch-up, slightly shellshocked and confused about just how you got here. You build a website. You build an app. But you're not quite sure it's working. And you keep thinking: How can you be getting creamed by a competitor that didn't exist until nearly 20 years after you were founded and doesn't operate a single store?

Related: How Retailers Are Thriving Despite the Supposed Death of Their Industry

The Future: You're back, baby!

It was a rough adjustment, but you've cracked the code. You astutely saw that people still actually like coming into stores (two out of three like to see the merchandise for themselves - and nine out of 10 dollars are still spent in physical retail). So you made the most of what you had.

Here's how you did it:

  • Taking a leaf from the Amazon playbook, you applied the data-driven mentality you've always had to understanding who your customers are.
  • With that data, you've created highly personalized and efficient experiences for them, whether they've shopped online or bought in store.
  • Your stores are now product playgrounds -- fun, informative, enjoyable, experiential. People enjoy going.
  • You quit caring about where the sale took place -- and started viewing your stores, websites and apps as a means to the same end: revenue.
  • You closed down woefully low performing stores while retaining the lion's share that drive the bulk of your revenue, and because closures impact online sales for the same geographic region.
  • You trusted your instincts and kept filling your stores with amazing associates who are truly helpful and knowledgeable, and a huge differentiator in our digital world.

Physical retailers are seeing the writing on the wall -- like Amazon, they know that the fight isn't the efficiency of online against the expense of a store footprint. This is about the bigger picture: knowing the customer using a single view of them, with permission, to deliver personal and relevant experiences online and offline; and making their lives a bit easier.

It's about restoring their most precious commodity: time.

Brent Franson

CEO of Euclid Analytics

Brent Franson is the CEO of the Euclid Analytics, a retail analytics and omni-channel engagement company located in San Francisco. Six years old, Euclid has raised $47.5M from Benchmark Capital, NEA, Harrison Metal and others. Brent is a serial entrepreneur who has been founding and running technology businesses since high school.

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