Are Physical Stores Making A Comeback? Is It All About The Product?

The short answer is…YES.

The ecommerce juggernaut that began more than a decade ago seems, for now at least, to have peaked.

According to the Federal Reserve, ecommerce captured a high of 16.4% of overall US retail sales in mid-2020. That slice of the pie has been shrinking in the year since, down to 14.5%.

Today, brands are refocusing on adding or expanding a physical, brick-and-mortar presence, “to enhance the retail experience they offer to their customers,” according to ecommerce platform Shopify (which recently laid off 10% of its workforce, or about 1,000 employees). “DTC (direct to consumer) brands are now increasingly viewing brick-and-mortar stores as a competitive edge.”

Ecommerce, once the go-to business model with low up-front investment, has become a burn pit for marketing dollars. From about $9 per customer acquisition cost (CAC) in 2013, current estimates for CAC run as high as $45, and I have heard of numbers as large as $200.

Worse yet, the third-party cookies that have allowed marketers to track users and deliver targeted advertising are being phased out.

According to trade journal Digital Information World, Google plans to rid its Chrome browser of cookies in the next year or so, and Apple has already restricted cookies on its Safari browser. In the EU and in California, legislators are adopting restrictive rules aimed at protecting individual privacy.

What seems to be going on here is a return to the rules of basic human nature.

According to Microsoft’s Ricardo Belmar, as quoted by Shopify, “Consumers want that physical shopping experience they couldn’t get during the pandemic, but also because ecommerce just hasn’t made product discovery as easy as walking down a store aisle or looking at a store display to see something you want to pick up and buy.”

Ecommerce made retail seem easier than it is. As it turns out, good old-fashioned common sense is going to rule the day. Have good product and the customers will want to come and then return. Seems straightforward. Another common sense approach is to listen to your customer. Feedback and research from consumers is what separates the companies that succeed from those who don’t.