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With ecommerce here to stay, how should physical stores now be best managed?

Online penetration was ~30% higher in August 2021 after stores reopened vs pre-COVID, showing ecommerce is here to stay. Retailers and vertically integrated brands need to optimize their physical stores within their omnichannel distribution network for profitable online-offline growth. This requires deep understanding of their categories’ shopper journeys and creatively evolving these.

The right use of each retail touch point based on shopper's needs and expectations will enable success:

McKinsey’s Dec’21 reports note:

◊ “A retailer’s online presence will be the single most important portal to start interacting with consumers. 80% of consumers make their retail brand or purchase decisions online. Omnichannel customers purchase up to 70% more often their offline-only peers.

◊ “Physical stores remain the primary point of purchase—~75% of purchases still take place here (5% now click-and-collect)” ◊ “The benefits of physical stores go beyond their share of sales. 60-70% of consumers across categories research and shop both in stores and online. Online channels provide convenience, but offline offer opportunities for consumer engagement, brand building, and pickup.”

McKinsey recommends 3 main approaches to reconfigure stores (see video)

  1. “retain current layout of the physical store, with online picking and pickup services layered on top.

  2. repurpose a portion of the floor layout for order pickup.

  3. fully transform the retail space into a dark store” (fulfillment center)

I would add a 4th to transform part of the store to experiential.

They reco asking questions on consumer journey and experience like:

₪ “How can we keep omnichannel processes from disrupting the shopping experience in store?

₪ How can we make the in-store experience feel like a continuation of online or mobile, and vice versa?

₪ What are consumer expectations regarding last-mile delivery speed?”

To win in the “new normal”, retailers must creatively evolve their full omnichannel networks.

McKinsey reports:


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