Resurgence of Brick and Mortar Stores in Online Shopping Era

January 27, 2023
Team Streamoid

eCommerce has revolutionized online customer engagement and shopping experiences and has grown manifold over the years. Case in point – the global eCommerce retail sales volume has grown from $1.3 trillion in 2014 to $5.7 trillion in 2022. It is predicted to reach $8.1 trillion by 2026. Does this mean brick and mortar formats in retail are going extinct? Has the battle been fought and won by online retail? No and No. While the number of customers who have never shopped online is decreasing, it does not mean online shoppers have completely stopped visiting brick and mortar stores.

In fact, brick and mortar sales saw higher growth than eCommerce sales for the first time in 2021. While eCommerce grew at 14.2%, brick and mortar sales grew at 18.5%. Further, 85% of all retail sales in the US occurred in physical stores. In India, traditional retail still contributes 81.5% to the retail sector while organized brick and mortar contributes 12% and online sales channel just 6.5%.

Despite all the advantages and tech advancements in online shopping, physical stores still have a distinct edge. There is no replacing the engaging and welcoming environment, ability to touch and feel, personalization, one-on-one shopping experiences of the brick and mortar formats. 5.3% of shoppers also prefer physical stores over online shopping since they enjoy finding unique products from local retailers that online shopping often doesn’t provide.

However, brick and mortar stores cannot operate in the traditional manner and succeed. Online shopping is leaving a dent in their conversions and revenues. They need to augment their capabilities and move toward omnichannel retail to thrive in the years to come. In this article, we discuss the major challenges facing brick and mortar stores and ways to prepare themselves for the future of retail.  

The rise of online shopping and its impact on brick and mortar stores:

Dropping footfalls
Offline-only stores are suffering as shoppers have moved online. 81% of retail customers conduct online research before buying a product. A Google survey says that 74% of in-store shoppers who used online means for their primary research looked for something in-store related. For instance, closest store, in stock near them, locations, store timings, contact information, etc.


So, offline-only brick and mortar stores will fade away if they don’t digitize now. If they don’t have an online presence today, their footfalls will continue to drop.

In fact, 73% of retail customers leverage multiple channels to shop and look for unified experiences across the different channels. 84% of customers believe that brands should connect their offline and online channels better.  

Increased competition
One of the most significant challenges they have faced is the increased competition from online retailers. With the ability to reach a global audience and offer a wider range of products at often lower prices, online retailers have been able to steal market share from traditional stores.

Further, small and medium businesses are able to compete at a global scale, instead of just the local markets, thanks to the online marketplaces and platforms that help widen their reach.

The removal of market inefficiencies by marketplaces has allowed for the rise of D2C brands. Manufacturers who depended on branded players are now selling the same product for less online. Shoppers’ brand loyalty online is dismal. With 1 in 3 customers lacking brand loyalty, peer reviews are what they rely on. So, it is not unusual for unknown brands to become stars.  

Price wars
Everyone's prices are available at the shopper’s fingertips, especially on comparison marketing sites. So, defending a price differential becomes tough online. Brick and mortar stores must invest in the right technology and rethink their strategies now to ensure they remain competitive.  

Widespread Use of Mobile Phones for Shopping
Mobile commerce has made it even easier for consumers to shop from anywhere at any time, further eroding the customer base of traditional stores. In fact, 54% of all retail eCommerce sales comes from mobile commerce sales.

For retailers who already have apps up and running, the rise of mobile commerce is amazing news. However, for offline-only stores, it is cause for concern. Customers expect stellar mobile experiences and unified shopping experiences across all channels. The failure to deliver such experiences is detrimental to brick and mortar stores.

Store Closures and Job Losses
Additionally, the rise of online shopping has led to the closure of many physical stores. As consumers increasingly turn to online retailers, brick and mortar stores have struggled to maintain their sales and profits. This has resulted in numerous store closures and the loss of jobs in the retail sector.

To compete with online retailers, brick and mortar stores have had to adapt and find ways to differentiate themselves. Some have focused on offering unique and personalized experiences, such as in-store events and demonstrations. Others have focused on offering a wider range of services, such as buy online, pick up in-store options and in-store returns for online purchases.

Despite these efforts, many brick and mortar stores continue to struggle in the face of online competition. The rise of online shopping has had a profound impact on the retail landscape, and it remains to be seen how traditional stores will continue to adapt and evolve in the coming years.

The rise of the "store of the future"

Brick and mortar retailers are finding new ways to compete. And omnichannel retail is allowing retailers to do just that. Omnichannel retail helps integrate online and offline shopping experiences and offer customers a seamless and consistent experience across all channels. We call it the "store of the future" which is a blend of the physical and digital worlds.  

New brick and mortar formats are incorporating the learning of online stores in a variety of ways. One of the most prominent is the use of technology to personalize the shopping experience. Using artificial intelligence (AI), retailers can offer customers personalized product recommendations based on their previous purchases and browsing history. This helps to drive sales and customer loyalty by providing a more relevant and tailored shopping experience.

Additionally, retailers are using mobile and digital technologies to enhance the in-store experience. Mobile apps and other digital tools help customers shop and engage with the store in new ways, such as mobile checkout and store maps. This makes the shopping experience more convenient and efficient, helping brick and mortar stores compete with the speed and convenience of online shopping.

automatic checkout

The rise of omni channels and the integration of online and offline has also changed the way that retailers approach their physical stores. Rather than simply being a place to make purchases, brick and mortar stores are becoming more experiential, offering customers unique and engaging experiences that cannot be found online.

The emergence of the "store of the future" is a response to the changing nature of shopping and the need for brick and mortar retailers to adapt and compete in the digital age. By leveraging technology and the learning of online stores, retailers can offer customers a more seamless and personalized shopping experience across all channels.

Case study: Reliance’s Azorte store, AI-driven retail stores by Zara, H&M and the use of AI to improve shopping experience

The retail industry is constantly evolving, and companies are always looking for ways to improve the customer experience. One way that retailers are achieving this is through the use of AI. In this case study, we will explore how Reliance’s Azorte store is using AI to improve the customer experience, as well as how leading brands like Zara and H&M are leveraging AI in their retail stores.

Reliance’s Azorte store
The Azorte stores include several tech-enabled interventions to enhance the shopping experience for customers. These interventions include smart trial rooms that use a range of sensors and other technologies that can track a customer's movements and a virtual mirror or other visual display that allows the customer to see how different clothing items can be styled in real time.

In addition, it also includes fashion discovery stations where customers can browse and try on the latest fashion trends. These stations use AI technology to recommend products and styles based on the customer's individual preferences.

Another tech-enabled intervention in Azorte is the implementation of "Endless Aisles''. This technology allows customers to access the entire product catalog, even if the item is not physically in the store. Customers can simply scan the product and have it delivered to their home or picked up at a later date.

Furthermore it also includes “Self-checkout Kiosks” to streamline the checkout process. These kiosks use AI technology to allow customers to scan and pay for their own items, eliminating the need for long lines and reducing the need for human employees.

Overall, this flagship store incorporates a range of tech-enabled interventions to improve the shopping experience for customers and make the store more efficient and effective.

Azorte Reliance

Zara and H&M
Leading fashion brands like Zara and H&M are also using AI to improve the shopping experience in their retail stores. For example, Zara uses AI-powered fitting rooms that can provide customers with personalized product recommendations based on their body type and preferences. This allows customers to quickly and easily find the perfect outfit, without having to spend hours browsing through the store.

H&M, on the other hand, uses AI to help customers find the perfect outfit for any occasion. The company’s AI-powered styling assistant can provide customers with personalized outfit suggestions based on their personal style, the occasion, and even the weather. This makes it easier for customers to find the perfect outfit, without having to spend hours trying on different clothes.

AI and the Future of Retail
The potential impact of AI on the future of retail is significant. As AI technology continues to improve, retailers will be able to offer more personalized and efficient services to their customers. This will not only improve the customer experience, but also help retailers increase their revenue by providing targeted marketing and personalized product recommendations.

Furthermore, the potential for further innovation in AI technology is vast. In the future, retailers may be able to use AI to predict customer behavior and preferences, allowing them to create tailored marketing campaigns and personalized product recommendations. This could result in higher sales and more satisfied customers.

AI will play a crucial role in retail in the future. As technology continues to evolve, retailers will need to adapt and incorporate AI into their business operations in order to remain competitive and provide the best possible customer experience. By leveraging the power of AI, retailers can improve their operations and drive growth in the future.

The future of retail is likely to involve further innovation and the integration of AI to improve the customer experience. The use of AI is playing an increasingly important role in this process, with retailers using it to improve the customer experience and offer personalized recommendations.

At Streamoid, we are at the forefront of this change, offering AI-powered personalization solutions for retailers. We can help retailers navigate this changing landscape and take advantage of new technologies to enhance their omni-channel strategy. Contact us to learn more about how we can help you improve the customer experience in your stores.

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