For most of us today, shopping is an almost entirely digital experience. Whether we’re buying groceries, clothes or books, it is easier and more seamless to do so online than it is to traipse around malls and retail stores as we used to—especially with services like Amazon Prime, which offer free shipping.
However, it seems like there is a sticking point when it comes to retail, a small but mighty sector of the industry that seems to thrive despite the fact that it has become far more convenient to do your weekly shopping online. The continued existence of this sector begs the question: will brick and mortar retail ever fully die?
For compelling proof that it might have some staying power, just consult the recent purchase of healthy food retailer Whole Foods by online shopping behemoth Amazon for a whopping $13.7 billion. While it’s true that Amazon likely wants to expand its reach into the online grocery shopping market, the takeover of a brick and mortar retailer works the other way, too: it gains an automatic foothold in the physical retail market as well.
As Quartz reported: “Approximately 90% of Amazon Prime subscribers live within 10 miles (16 km) of all 460 Whole Foods locations, a boon for the company and just one reason why the acquisition of Whole Foods was smart.” In addition, a statement from Whole Foods/Amazon noted that the company was not just focused on their digital offerings: “Amazon and Whole Foods Market plan to offer more in-store benefits and lower prices for customers over time as the two companies integrate logistics and point-of-sale and merchandising systems,” the company said.
So why would the largest etailer in the world want to get into retail? And what is it about brick and mortar shopping that means it has maintained a foothold even in the era of hyper convenience? According to research done by industry analyst RetailDive, “the ability to see, touch and feel products as well as take items home immediately rank highest among the reasons consumers choose to shop in stores versus online.” The survey found that 62% of shoppers wanted this experiential aspect, while “49% of consumers say they choose stores over the web because they want “to take items home immediately.” These numbers are striking given the fact that online shopping couldn’t be more convenient or mainstream. In other words, it’s had ample time to scale up the competition facing traditional retail brands.
Another sector where this seems to be true is in the luxury market. The reason for this is that when someone is spending hundreds or thousands of dollars for a single item, they don’t want it just dropped through the postbox—they want to feel an “experience”, As one luxury retail insider told The Telegraph: “the world of internet retailing can never fully recreate the “magic” of bricks-and-mortar shops.” He went on to predict that the market will “reach a maximum of 25- 35% of luxury goods sold online. So, at the end of the day, around two thirds of sales will still be in physical shops”
In the context of Whole Foods and Amazon, this also makes sense. Since Whole Foods is known for selling more premium products and a more adventurous shopping experience, consumers get excited to walk through the doors, read labels, and perhaps try something new. In other words, unlike less differential products like socks or a book typically sold on Amazon Prime, high-end groceries are a more hands-on experience where the consumer wants to be more discerning. In that way, Amazon has been wise to co-opt Whole Foods physical infrastructure and tack on its storied logistics and data-driven empire on top of it.