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Brick and Mortar in the New Economy

Brick and Mortar in the New Economy

By | 05.07.13
Brick and Mortar in the New Economy

The rise of technology led to a shift from the brick and mortar experience, offering improved convenience, speed, productivity, and efficiency in the online store. But, the seeming slow death of brick and mortar has led to another shift, and novel opportunities.

Speaking at the Reesio-run RealTech SF 2013 conference, Erik Eliason discussed a plan that mixes the efficiency of technology with brick and mortar. Consider creating an online shop through an established platform—think: Etsy, Storenvy; move to a self-hosted ecommerce website, test a brick and mortar shop utilized around a specific event, and secure space for a semi-permanent shop.

Eliason says the lean startup plan uses low-cost experimentation, shorter terms, and “customer development,” with so-called “pop-ups” focusing on key events. Gone are the days of multi-year leases as pop-ups open for weeks or months, driven by major holidays or events, such as Christmas and Fashion Week. Pop-ups offer reduced risk with reduced tenant-landlord issues and the ability to target short-term locations.

Created in pre-existing spaces that offer fixtures, lighting, and WiFi hotspots, pop-ups pay less and use a few temporary, portable, and reusable elements, such as racks, displays, and signage. Because the pop-up can be used in a variety of industries, the notion is gaining traction to meet a variety of business objectives: ecommerce moving offline for better customer connectivity, business and brand awareness expansion, and brand and retail activation, to name some, says Eliason. Should a retailer seek to open a permanent shop, the pop-up provided valuable data on location and customer habits while building momentum and increasing revenue through sales.

With some malls dead or dying—what AdWeek describes as “zombie shopping malls”—retailers are seeking smaller retail spaces, says Jeff Jordan, general partner at venture capital firm Andreessen Horowitz. Meanwhile, a trend is being seen with malls driving sales in nontraditional ways by offering events that mix recreation, education, and other activities with the brick and mortar experience that are hosted at offices, clinics, indoor sport arenas, churches, schools, and parks. Today’s malls also now house doctors offices, restaurants, sports complexes, supermarkets, and urgent care medical clinics, while offering the retail shopping experience, creating what David Ginsburg, CEO of Downtown Cincinnati Inc. describes as a mixed-use mall.

The National Retail Federation’s 2012 Shopper Experience study found that most purchases are made in physical locations. The difference is that shoppers want more. Teenagers offer a paradoxical explanation: They prefer in-store shopping, according to research from Piper Jaffray, but do most of their shopping online. Airport malls may offer an explanation, says food retail strategist Stacy Moore. Retailers enjoying greater success target items that are unique, fun, and locally relevant. Consumers will go to a physical store, but only if there is a new experience, or there is the opportunity for specialized knowledge. In fact, with most purchases made in physical stores, there is a real opportunity for brick and mortar to experience positive, even symbiotic, change in the new economy.

Sources:

Eliason, Erik. “Lean Retail: The Future of Brick and Mortar.” Huffington Post, May 5, 2013.

Voight, Joan. “Does the American Shopping Mall Have a Second Life?” AdWeek, May 6, 2013.

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