THE BLOG
10/15/2014 02:29 pm ET Updated Dec 15, 2014

Why Amazon's Decision to Open First Brick and Mortar Store Signals the Demise of eCommerce

Martin Barraud via Getty Images

It's hard to ignore the headlines lately about the growth of online retail and e-commerce, with retailers like Walmart vamping up its website to go head-to-head with Amazon and companies battling it out online by introducing perks like free shipping. Amazon also just announced its foray into physical retail by planning to open a brick-and-mortar store in Manhattan just before the holidays. Through all the coverage, much of the hype seems to focus on the promise of e-commerce as outweighing the value of the physical store. And that's not entirely without reason -- the online retail market is huge, expected to hit $294 billion this year.

However, the truth is that while $150 billion more will be spent online between now and 2018, $300 billion more will be spent offline during that same time. By 2018, online retail is expected to still only make up 11 percent of the U.S. retail market. Clearly, the physical store is alive and well. Retailers are only beginning to capitalize on the tremendous opportunities for optimizing this channel.

Think for a minute about your own shopping experiences. Sure, online shopping is convenient, with the ability to do it on your couch. But, there is real value in being able to physically see, touch and feel the product. Add in the advice of the sales associates and the social experience of browsing a store, and that's why in-store retail makes up 90 percent of the total market.

With brick-and-mortar here to stay, omnichannel retailers' success lies in recognizing their physical channel as the most important and focusing on enhancing the in-store customer experience. How exactly are they doing this? By capitalizing on the biggest transformative opportunity in retail since the credit card: mobile.

Shoppers are embracing mobile at rapidly increasing rates, using their devices to make purchasing decisions while in-store -- but only a few visionary retailers recognize the true impact of mobile on their sales. Smartphones currently influence 19 percent -- or $593 billion -- of all in-store retail sales, expected to increase to 30 percent by the end of this year. Add in all digital technologies (beyond just smartphones) and you're looking at a 50-percent influence on in-store sales by year end. Not only do customers convert at a 40 percent higher rate when using a mobile device during the buying process, but more than half of shoppers also plainly express a desire to better use mobile in-store to speed the research and checkout process.

At this point, if retailers are to thrive, they must join in on this digital takeover and creatively engage customers via mobile in stores. This was partly the motivation behind Apple's much-talked-about Apple Pay, iBeacons and other indoor location technologies. These platforms laid the foundation for customer engagement through targeted ads, special offers and other location-based services. But that's just the start -- the future of retail goes beyond beacons, checkout and on-site deals.

A number of mobile technologies have been cropping up, which often work with iBeacons, Wi-Fi and other platforms, that are making way for an even more dynamic, contextualized shopping experience. Retailers are now harnessing mobile to connect with customers at every single point of their shopping journey, from initial product research, searching products and building shopping lists at home, to finding a nearby store, mapping items in-store, price and product comparison, making purchasing decisions, checking out and much more. This engagement with shoppers along their entire path to purchase has proved to be key to making the most of the physical store, letting retailers better assess and meet customers' needs and make shopping more efficient and profitable.

Mobile in-store engagement is rapidly making itself known as the future of shopping, and the digital revolution has only just begun. To survive, retailers must accept that the physical and digital are no longer separate entities when it comes to brick-and-mortar retail and that mobile is the critical link between them. By embracing mobile in-store, retailers are gaining a jumpstart in boosting sales, improving customer loyalty and, most importantly, creating an overall better, more personalized and meaningful experience for shoppers. It's what shopping should -- and will be -- all about.