Why Are Brick & Mortar Stores Failing and Can They Be Saved?

The internet is growing larger every day, providing consumers with more and more places to buy their goods. However, while online sales are booming, some traditional brick-and-mortar stores are taking a hit.

Circuit City, Radio Shack, and Kmart are just three of many stores that have filed for bankruptcy and felt the pressure of competition from online retail giants such as Amazon.com and Walmart.com.

In this article we'll address why this is happening and if traditional stores can really be saved.

Online Shopping Is Attractive for Many Reasons

Convenience and Product Availability

The top reasons that many people shop online are convenience and product availability.

A quick search on Amazon will bring up exactly what you're looking for the majority of the time. In fact, an average of 1.3 million new products are added each day, increasing the likelihood that what you want will be available on the site.

Currently, Amazon's largest category of items is electronics. In 2017, there were over 91.8 million products in this category alone, with cell phones being the top subcategory coming in at 59.88 million.

And, if Amazon doesn't have what you need, then a quick Google search will locate the item at another online outlet rather quickly.

Unlimited Stock and the Ability to Compare Prices

If you need a computer, a traditional store may only offer a few brands, such as HP, Dell, Lenovo, and Mac, in select models because space is limited. If you shop online, you can compare many different makes and models to find the best deal, and the web store can drop ship products from multiple warehouses.

Many brick-and-mortar stores like Best Buy also offer online-only items and deals on their website, but I find that their prices are still way outside the range of items available at other online outlets.

Coupon Codes and Loyalty Points

I like to be a thrifty shopper, so when I find a coupon for something that I use regularly, I make sure to snatch up the item before the coupon expires. Unfortunately (thanks to shows like Extreme Couponing), many brick-and-mortar retailers now offer even fewer discounts and coupons for their customers.

When shopping online, many websites offer free shipping for new customers or if your order meets a set dollar amount. There are also coupon websites like RetailMeNot.com, where you can find a coupon code for just about any shopping site on the web. Some sites even offer loyalty points to their customers that add up to discounts and even free items.

No Sales Tax

Many online sites still do not charge sales tax. In fact, if the business does not have a physical presence (or nexus), then they are not required by law in the United States to pay sales tax.

Same-Day Delivery

Retail giants such as Amazon are now offering same-day delivery in certain metro areas. You simply place your order by noon, and it's delivered to you no later than 9 P.M. It's quick, easy, and frees up your time so that you can focus on other things.

Can Brick-and-Mortar Stores Really Be Saved?

I believe that traditional brick-and-mortar stores can be saved, but they will have to ultimately look at the way that they do business and make the shopping experience more appealing (and easy) for their customers.

The following are things that I think traditional stores should focus on to keep themselves competitive and relevant in the marketplace.

Better Customer Service

When I think of customer service, Walmart immediately comes to mind. There have been many times that I needed help, and an associate was nowhere to be found or just didn't seem interested in helping me.

I think retailers should invest in yearly customer service workshops for their employees. Also, an associate should be available at all times in their designated area in case a customer needs assistance or has questions.

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Product Should Be Pulled Promptly

Okay, so I've finally located a store associate to help me in the electronics department. I've picked out a television that I like, and there's none available on the floor, but they offer to pull one from the back. Great, now I will have to wait an hour for someone to pull my TV. In fact, I've waited several times for an associate to pull stock from the back of a store, and it was never a speedy process.

Luckily, there's an easy fix to this issue. An employee should be assigned to the warehouse and pull the product promptly upon request. If an employee is not needed for this task full-time, then floor associates can rotate weeks or days pulling product from the back as requested. Again, this should be speedy. The customer should not have to wait more than 15 minutes for someone to pull a product.

Keep Prices Competitive

Big retailers should attempt to price match with online products. For example, if a customer finds a laptop computer on Amazon for $499 and Best Buy has the same exact computer for $599, then more than likely, Amazon will get the sale. The only downside is that the customer has to wait for Amazon to ship the computer to them, and even with Amazon Prime, it will take two days to get there. The two-day wait is unappealing to this specific customer because the hard drive in their old computer failed, and they need the new one as soon as possible for a school paper due by the end of the week.

If Best Buy would price match Amazon's price, then the customer could have the product the same day and more-than-likely not mind paying the sales tax. That would be a win-win situation for the customer and the retailer.

(I worked in a call center for nine years, and it's been my experience that customers don't mind paying a little extra for convenience.)

Offer Better Quality Products

Brick-and-mortar shops should attempt to source some products locally with higher quality instead of importing them from overseas. Products made in China are definitely cheaper, but the quality usually suffers, and the item only lasts a short amount of time for the consumer before they have to buy another one.

For many years, traditional stores relied on their quality of goods, customer service, and reputation to drive sales. Unfortunately, they've moved away from this over the years, and it's definitely hurt their business.

Consumer Loyalty Programs

Stores should offer credit cards and/or loyalty cards to bring in business and repeat customers.

A great example of this is Kohl's. Kohl's is an American department store that offers continuous sales on all its stock. They also offer many credit card promotions and have a loyalty program as well.

Kohl's customers can often get an additional discount off their total purchase price if they charge it. Also, consumers can accrue loyalty points that add up to discounts over time.

These types of programs bring in new business and reward loyal customers. Every store should take advantage of these easy marketing tools for boosting sales.

Same-Day Delivery

Just like Amazon, brick-and-mortar stores need to offer a same-day delivery option to their customers. Traditional stores can easily partner with popular ride-share companies such as Uber or Lyft for fast product delivery.

It's Never Too Late for a Change

It's not too late for brick-and-mortar stores to make a turnaround in the retail market. If they follow trends and make shopping more appealing and convenient to consumers, then there is a future where online and traditional stores can both turn a profit without threatening the business of the other.

References

• Sales Tax 101 for Online Sellers - TurboTax Tax Tips & Videos
  Most people are familiar with sales tax — that extra percentage stores collect from customers in many states. If you own a store in a state that collects a sales tax, you are usually required to add state and local sales taxes to the customer's total
• How Many Products Does Amazon Sell Worldwide - October 2017
  Amazon sells more than 3 billion products across 11 marketplaces as of October 2017. Amazon U.S. has the highest number of products, with over a 606 million product count.
• Circuit City - Wikipedia
  Circuit City is an American consumer electronics retail company, which was founded in 1949 by Samuel Wurtzel as the Wards Company, operated stores across the United States, and pioneered the electronics superstore format in the 1970s.
• U.S. retail e-commerce spending 2020 | Statista
  This statistic shows the U.S. retail e-commerce spending from home and work locations from the first quarter of 2007 to the second quarter of 2020. In the most recent quarter, desktop retail e-commerce sales amounted to 108.2 billion U.S. dollars.
• Online Shopping Statistics, Facts & Trends in 2022
  Learn 24 mind-blowing online shopping statistics, including how e-commerce has changed and how online shopping will grow.

This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.

© 2018 Cleo Addams

Comments

Mohan Babu from Chennai, India on June 04, 2019:

Great article Cleo. While it appears to be a losing battle for the brick and mortar stores, they can do better by following some or all of what you have said.

Roseanne Pickering on January 31, 2019:

Let's say I went to a store to buy inexpensive drapes for my bedrooms. Drapes and curtains are sold 1 panel per package. If I find the drapes I want, there are never enough panels in the store. That doesn't include drapery sheers and valances that match (there are never enough of them for all my windows either) you can wait 14-30 days for the drapes you need to cover all your windows. If stores would stock better, more people would go to the stores vs. ordering on line. I also don't have to drive, waste gas or fight for a parking space.

Cleo Addams (author) from USA on January 06, 2019:

I guess we have a difference of opinion, then. I have never felt hassled by anyone at a store asking if I want to apply for a store card nor have I ever been treated rudely for declining. I think that maybe the employees need more training if they treat someone rude for declining a store card. I, for one, enjoy the loyalty programs. I have gotten so much free stuff for being a loyalty member - especially at Kohl's and Kroger. I love free clothes and groceries. So, again, no complaining from me.

No on December 13, 2018:

You are wrong about loyalty programs and credit cards. Every time you go to a store you are asked if you have your card or would you like to apply for our credit card. Customers are tired of being asked and it turns them away. Worse yet employees have quotas of store cards and are less likley to treat you respectfully if you decline