The contemporary digital era has evoked numerous changes in the retail sector. It is changing the way consumers make purchases and interact with businesses. Consumers have many choices for products and services and businesses to buy from. They choose whether to make a purchase online or offline. With the growth in e-commerce, many customers are opting for online purchases. Also, online purchases are fast, convenient, and easy to access. Although most shopping and purchases still occur offline in physical stores, as e-commerce continues to grow, this trend will change. Physical stores will evolve to fulfillment centers for online purchases. This article examines the changing role of retail stores to become fulfillment centers.
Rethinking Retail Stores
Retail stores are an expense by themselves. You have to cater for many expenses with the major ones being labor, real estate, and inventory. However, as shopping shifts online, it’s time to rethink the purposes of retail stores and the expenses they incur. Businesses will turn to technology to help with some tasks and hence requiring fewer employees. The fewer employees can work from home using technologies such as FaceTime to interact with shoppers and address their queries.
To cater for real estate costs, physical stores will solicit for opportunities to grow revenue with their space. Wal-Mart is a prime example of a retailer that has identified ways to get lease revenue. It leases space in its Supercenters for services such as hair salons, physician’s offices, and restaurants. Notably, some of Wal-Mart’s Supercenters host Apple’s counters. Amazon uses its physical real estate to sell advertising due to the millions of customers that visit the stores weekly.
Retail Stores as Fulfillment Centers
As shopping shifts online, physical stores are becoming fulfillment centers for online orders. Leading retailers such as Wal-Mart and Target use their physical stores as fulfillment centers for products ordered online. Fulfilling orders from a physical store is cost-effective because a retailer uses existing resources. It is effective and inexpensive as compared to constructing warehouses. Research by the National Retail Federation Omnichannel Retail Index reveals that 32% of retailers let consumers buy goods online and pick them in physical stores with 86% planning to adopt an order online and pick-up in store strategy in the next year.
Customers want variety more than ever. They do not want retail stores to be scrapped entirely. Physical stores still offer a social interaction point for retailers and consumers. Consumers will still go to physical stores as long as they get compelling, fun and fruitful experiences. Consumers want omnichannel retail where they decide whether to shop in stores, shop online and pick up goods in retail stores, or shop online and have the goods shipped to them. In line with this, there’s a growing trend towards making an order online, and it is delivered from the nearest retail store.
Some retailers are turning to distribution centers to fulfill online orders. A good example of this is Amazon. Amazon has invested in many distribution centers to ensure that online orders are delivered in the shortest time possible. This strategy is an attraction to consumers who value convenience over experience. A Forrester study conducted in 2014 affirmed that 60% of consumers expect retailers to employ omnichannel services and make the purchase and return of goods as seamless as possible.
The retail sector is changing drastically with more shopping projected to take place online as opposed to brick-and-mortar stores. However, this does not mean that physical stores should cease to exist. It means that they devise mechanisms to adapt to the changes such as soliciting for opportunities to grow revenue with their space and using physical stores as fulfillment centers for online orders. Using retail stores as fulfillment centers have positive outcomes for reducing costs, rebalancing inventory, expediting shipping, and offering customers’ greater flexibility. Do you need comprehensive fulfillment and transportation services for your business? Contact the experts at CTL Global Solutions. They will be glad to assist you.