Does eCommerce Success Mean Physical Stores Will Disappear in the Future?

01/04/2016 03:26 pm ET Updated Jan 01, 2017

No doubt eCommerce is growing, and it will continue to grow. However, brick and mortar stores would not die as a result of the rise of eCommerce, at least not in the near future.

The notion that eCommerce is taking over physical stores has already misguided many people. Brick and mortar stores are far from vanishing, and there are some solid reasons for it. Let's slice and dice those reasons.

Offline Spending Is Greater Than Online Spending

No doubt that eCommerce is growing. According to the online retail projections by Forrester, eCommerce sales in 30 retail groups are expected to grow to $414 billion by 2018. Thanks to the emergence of the World Wide Web, and the advancement of related technologies, consumers now have 24/7 access to large assortments of merchandise at affordable prices. For majority categories, including media, mobile devices and electronics, we have witnessed a great swing to the Internet from physical stores. However, it is too early to predict the end end for physical stores.

Even though the projections for online spending is optimistic with $150 billion expected to be spent between 2015 and 2018, yet we are also expecting $300 billion in spending at physical stores in the same duration. This indicates that the opportunities for brick and mortar stores is greater than that for eCommerce.

Now let me debunk the myths associated with the rise of eCommerce:

● eCommerce Has Killed Physical Stores: No it has not! According to real estate agents operating in huge markets across the US, the demand for retail real estate has hit its record high and there is shortage of supply to meet those demands. Moreover, the tenancy rate at shopping malls are almost 100 percent, meaning that more retail estates are expected to be developed and occupied by physical format retailers in the future.

● Physical Store Retail Will Easily Crumble: Physical store retail was still a $4 trillion market in the US in 2013. Do you still think that brick and mortar shopping is too small to sustain the eCommerce blow? Of course not. Even though consumers are showing the door to physical stores that follow older concepts, yet we are seeing the rise of fresh concept stores all around the US. We are seeing innovative and enthralling success stories of physical stores, ranging from apparel stores to a personal vaporizer review sites to restaurants to health spas. It would be easy assume that this trend will continue even among avid users trying to quit smoking with an e-cigarette, as the sales trends grew from $5 Million in sales to $500 Million from 2007-2012 alone in the United States, most of which take place on an eCommerce platform.

● Consumers Don't Go To Malls Any Longer: Even though there are many shopping malls that are dying and require being demolished, yet there are still those shopping centers that are performing well. You can see this for yourself by visiting shopping malls near you. What I want to emphasize here is that not all shopping centers are made equal, just like not all eCommerce retailers are made equal. Both shopping malls and eCommerce sites can lose business if they fail to maintain productivity through improvements and innovations. When you visit shopping centers that are serious about their business, you would see their shops and parking lots packed.

● Brick And Mortar Stores Will Die Because They Are Not Innovative At All: Though brick and mortar stores might not be as innovative as e-tailers, yet it is wrong to say that they are not innovative at all. Let me remind you about the pop-up shop idea that was presented more than ten years ago. The concept is now gaining toehold with big retailers. Pop-up shop is a creative and effective way to always spice up the shopping experience of consumers through innovations and spontaneity.

Even e-tailers like Amazon have experimented with pop-up shopping concepts. It is important to bear in mind that consumers prefer face-to-face interactions instead of online interactions during shopping, meaning that physical stores are going to stay there is they continue to work with innovations and creativity.

Meanwhile, eCommerce retailers are seeing all of their excitement vanish as they settle the sales tax problem associated with e-tailing. As of now, five states have already imposed sales tax on purchases through eCommerce sites, and e-tailers in those states have already witnessed 6 to 12 percent decrease in sales. This reinforces the fact that physical stores are here to stay, and if you are still undervaluing their growth, you are omitting a huge chunk of the retail representation.