by Jye Smith
November 26th, 2012

According to comScore data, online retail sales in the US on Black Friday on November 23 topped US$1 trillion for the first time ever as an increasing number of consumers used the internet to do their early holiday shopping. Similarly, during China’s Single’s Day, celebrated earlier in the month on November 11, sales volume at Tmall.com, the country’s biggest online store, reached a record high of US$800 million in just eight hours of trading.

On the surface this would tell us that traditional retail is under serious threat as more and more shoppers opt for the convenience of online buying. But a closer look suggests that the battle between traditional and online retailers is altogether more complex.

Undoubtedly, the role of retail stores is changing, although this can depend on both the product and purchasing considerations. Convenience is still a huge factor in purchasing decisions.  Just look at a market such as Hong Kong where ordering your shopping online is no more convenient than popping into the seemingly endless supply of shopping malls and street-level retailers. Likewise, for high-value purchases – a motorcycle or a guitar for example – traditional retailers are still crucial: it is about having an experience and perhaps weighing options later, even if the final decision is made online through an eCommerce platform. If anything, it is probably the purchases that are medium-value and non-urgent that will add redundancies for to retail stores.

What is changing, though, is that the purchasing focus will be on not only buying into the products, but also the ideas behind the brand.  It might be about immersing yourself in adidas and their world in-store before making a decision to buy.  In these situations, the people who staff these stores will still play an important role: think about buying a dSLR, or better yet, a new running shoe – you want the best advice in addition to the online reviews.

One direct consequence of this is that brands will need to work harder at providing a retail space that is engaging enough to encourage consumers to forgoe their online sites. And it is not only the likes of Apple that are doing this. Look at Citi, which has created some very different experiences for its stores around the region.  They don’t even really look like banks, and generally end up where banks aren’t.

Bricks and mortar retailers are not going anywhere yet. Indeed the more savvy brands are investing heavily in both the online and offline experience and realise that a combination of the two will be a strong business driver. A number of luxury brands — a sector that was at one point highly resitant to online properties — are showing how important it is to be able to blend experience with convenience. Cartier and Burberry are good examples. The consideration and purchase decision making process has changed dramatically. The purchase elements like trust, convenience and reputation are the same, but the way we get there has changed.  Now, more than ever, it is about knowing your product and your audience.