Amazon Is Not Killing Your Local Retail Store

An interesting thing happened on the way to the funeral for brick and mortar stores. They found a new life through the innovations of the likes of Amazon, Walmart, Best Buy, Target, and other national retailers.

The common thinking is that the retail real estate market is at risk because Amazon is pushing people online. The truth is Amazon isn’t killing brick and mortar retail; it’s showing us how to save it.

There are a few fundamental facts that all retailers should remember:

  • There are some things like groceries people don’t want to order entirely online.
  • Many people still like going out in public to shop.
  • Some people are uneasy about leaving items on their doorsteps where thieves can prey.

Enter Amazon, Target, Best Buy, and others with their increasingly popular phenomenon in which people buy their products online but pick up their orders in stores.

According to Adobe’s data, so-called BOPIS (Buy Online, Pickup In-Store) purchases were up a staggering 43.2 percent year over year. What this data makes clear is that the brick and mortar store is not dead.

Shoppers may not like wandering up and down aimlessly for what seems like hours to find items on their list, but it’s clear people want to at least get out of the house. BOPIS bridges the gap between online convenience and human interaction.

This strategy is not only helping to save some national retailers but also fueling growth.

National brick-and-mortar retailers are using BOPIS to boost their offline businesses and finding new life in a world inhabited by Amazon. Target and Best Buy have been among the most successful at it.

For instance, during its fiscal third quarter ended November 2, 2019, Best Buy reported revenue of $9.8 billion, beating Wall Street’s expectations – with growth fueled by a mix of online and offline sales.

Online and offline retail operations are no longer a zero-sum game.

One sector doesn’t have to prosper at the expense of the other. And, oddly, leading the charge of this melding of online and offline operations is none other than Amazon.

Amazon generates the lion’s share of its retail business online, but recently it’s made a big splash in brick-and-mortar.

In 2017, Amazon acquired Whole Foods for $13.4 billion. Now, two years later, Amazon is pouring investment into the company to enhance the Whole Foods experience by, for example, ramping up its delivery options to make it a more attractive option for shoppers and integrating Prime Membership with in-store discounts and benefits.

Amazon also launched its cashier-less stores, Amazon Go, in 2017 in a limited number of markets but is now placing more of them across the U.S., with plans to dramatically expand over the next few years – not only the number of stores but the size of the stores as well that could match the size of competing supermarkets.

What can we learn from these recent innovations and moves from some of the largest national retailers?

That the brick and mortar store is not dead. Retail is not dead. It just has to adapt.

Offline retail stores still appeal to consumers for many reasons, especially in food products, grocery stores, and niche and local products that can’t be easily replaced by the Amazons of the world.

It’s clear the future of shopping, like pretty much everything else, will be dominated by the Internet.

However, there is still a need for brick-and-mortar retail stores, and Amazon has provided a blueprint for all brick-and-mortar stores to leverage their online presence to boost their offline sales.

All of this should keep the demand for retail real estate investment robust.

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