According to new research from JLL, online-only retailers have begun to set up physical outlets in an attempt to gain a larger share of lucrative brick-and-mortar sales. The trend began in the US but is now starting to occur in other countries. It was also noted that retailers also continued to ramp up their online efforts to better compete.
“These days, seamless online and offline integration is required for any retailer to survive. It is what consumers are demanding,” Naveen Jaggi, president retail brokerage and capital markets, JLL Americas explained. “Whether it is an online retailer building out a physical store, or a legacy brick-and-mortar retailer increasing its online platform, aligning online and in-store is crucial to a retailer’s success.”
Famous retailers such as Nordstrom, and Macy’s in the US and Central in Thailand are among those advancing their online presence to create a shopping experience that transitions smoothly from offline to online. In addition to operating a large number of physical locations, Central offers an expansive website where buyers can find every item the group sells in stores along with special discounts.
“Being online alone is not the solution, with a high cost of targeting customers online, high distribution costs, stock control challenges and thin to negligible margins,” James Brown, head of retail research and consulting at JLL EMEA, detailed. “So in the same way as physical retailers are trying to build up an online presence, the move from pure play retailers to take physical space, to build brand and to provide an additional distribution channel, is the next obvious step.”
Most of Thailand’s major physical retailers such as The Mall Group, Tesco-Lotus, Big C and Makro have built their online platform while online retailers like Lazada continue to grow in popularity and could soon look to open physical outlets. The trend of online retailers opening physical shops is growing among SME retailers that started online and are now using storefronts to boost sales and brand exposure.
