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Indian Real Estate News : Goa
Brick and mortar giving a spin to retail sector
Source: Financial Chronicle Sep 22, 2016
There are many benefits that B&M businesses or business components have over purely internet-based services

As more entrepreneurs and established organisations move towards creating web and mobile apps, it is tempting to believe that brick-and-mortar retailers are a thing of the past. There is a growing inclination towards pulling funding out of store upkeep and concentrating on internet-centric distribution. Some apps offer value without even delivering a physical product, thus completely eliminating the need for a warehouse or store. However, the brick-and-mortar or B&M model is still a mainstay of the retail sector, and it is impossible for e-commerce to completely supplant physical stores. There are also many benefits that brick-and-mortar businesses or business components have over purely internet-based services.

#To begin with, online sales are still only a small part of the operations of many of the nation's major retailers, mainly because of accessibility issues; not everyone in India has the internet accessibility required to make online purchases. This limits the reach and contribution of online commerce in the retail sector. Until a digital India becomes our reality, physical outlets will continue to receive customers in large numbers.

# Walking into a physical store to make a purchase leads to instant gratification, something which is in sharp contrast to the customary wait that shoppers have to endure when ordering products online. Even the fastest e-retail platforms take at least 2 days to deliver purchases, unless the customer is ready to pay extra for 24 hours delivery. Though in case of Brick and Mortar customers can receive their desired products immediately at a nearby store.

# The B&M model allows outlets to switch out their apparel inventory more quickly. This is especially useful in keeping stock of latest trends, real-time demand patterns and strategies of competitive brands. The rising revenues of offline stores like H&M and Zara are a good metric for evaluating the benefits of brick-and-mortar models.

#Returns are significantly more costly for online retailers, while physical stores make the return process seamless. Making a trip to the store even encourages follow-up purchases. Thus, overall friction can be removed from the buying process only when the physical function of returning a product is matched by an enhancement in comfort for the buyer.

#Even a cursory examination of the consumer psyche reveals that people like experiences. These physical experiences are both in the store and with the product. While there is definitely need for an internet presence, it is also true that customers have to come into the store and feel excited. Merely seeing a picture of the product and clicking on a specification simply does not match up to feeling the desired product with one’s hands and testing it out. As such, physical stimulus can often play a major role in convincing a customer to make the purchase.

# The need for a physical store vis-a-vis an electronic one also depends on the product type. While a book can easily be sold online, people still feel safer trying electronic devices before purchase. Opening a store allows retailers to display their products and attract people outside of their loyal customer base.

# The B&M model has the advantage of making an impact through local visibility. No matter how many online advertisements are available to the customer, walking past a physical outlet everyday has great recall value. Storefront visibility leads to customers thinking of the brand as a part of their everyday surroundings. Another B&M-specific advantage is the ability to attract purchases through comforting and stimulating interior design.

# One-on-one customer service makes a marked contribution to sales. Customers are able to see a familiar set of faces and feel welcomed by the retail brand whenever they have a query or complaint. The website Sage.co.uk shared the results of a study in 2014 which revealed that 86 per cent of customers are willing to pay more for a product if they have received great customer service.

#It is also important to note that consumers belong to many different demographics. Older people tend to have a more traditional approach despite having access to the internet, and prefer to witness a demonstration when buying new products.

# It is rather telling that e-commerce portals like Myntra and Amazon are opening more and more physical outlets despite their success as internet giants. Several online-first organisations operating abroad, such as Warby Parker, Bonobos, and Birchbox, are also opening stores and showrooms.

These decisions point towards the fact that it is profitable for e-commerce to have a physical extension. In addition, e-portals can use features such as customer ratings, pre-orders, sales, popularity on review sites like Goodreads etc. to make better merchandising decisions for their B&M components.

A simple look at the revenue generated by physical stores tends to be rather deceptive. The troubles of B&M are not only due to the competition from e-commerce players, but also because of poor management. Employing competent salespeople and quality display methods can ensure brick-and-mortar stays put as the bedrock of the retail sector. Thinking of either e-commerce or the B&M approach as mutually exclusive competitive models is a rather short-sighted approach. The need of the hour is to achieve a synergistic integration between the two business models in order to optimise operations and drive greater, more sustainable growth.

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