The Changing Landscape of Retail

The size of offline retail in the United States is about $3 trillion. Compare that with $250 billion in online retail and it’s clear why most retailers invest in their physical stores more than they do on online retail.

Offline retail is 12x larger than online retail in the US. And although the growth rate of online shopping (12%) is impressive, it’s not enough for most store owners to invest in creating an enriching experience online for any potential customers. At least not yet.

According to Cyriac Roeding of Shopkick, $1.2 trillion of the $3 trillion in offline shopping is influenced by online activity. That’s 5x larger than online shopping and compared to online retail’s 12% rate of growth, online influenced offline shopping is growing at a rate of 19% per year. And the gap is widening.

So the question many store owners ask, ‘Should I start selling online?’, may not be the right question to be asking. The more important question a retailer could be asking is, ‘What can I do to enhance the shopping experience of a third of my existing customers?’

The conversion rate of consumers who visit your physical store is about 80%-90% compared to the conversion rate online at about 0.5%-3%. If you could create a more enriching experience for the thrid of your customers who are online before, during, and after they are in your store, there is tremendous potential for increasing sales.

Looking at the enormous gap between online sales and offline sales, the goal of getting customers into your store would seem to be a worthy investment. Or better yet, getting customers to buy more during their vist and having them return to your store may have the best return on investment. And you do this by making it seamless for your customers to interact with your store and your products, and by having them invite their friends to participate as well. This seamless fabric of interaction is taking place more and more online and you stitch it all together by having an online strategy.

By personalizing the shopping experience for your customers through participatory channels like square, yelp, and reward programs, you can not only capitalize on the increased sales you’ll experience with consumers who shop filled with the feel-good dopamine these channels ellicit, but you’ll also have them coming back through continued interaction with them when they’re not physically at your store.

So not only can you increase revenue from that third of consumers you’re not already communicating with online when they step into your store, but you can be a part of the discussion taking place online when people are looking for a product you carry, but unbeknowest to them, they go to a big chain retailer (even though they may not carry what they say they have online) because they list their products, market deals, and engage with the people who begin their offline shopping experience — you guessed it — Online.