Five Reasons Why Brick-and-Mortar will survive

By: Kaeli King, Grace Lin, Phil Shohat , Brian Babcock, Scott Burman, Tim McClellan, Phil Ziebold, Barbara Simmons

Twenty years ago, 50% of retail jobs were in traditional retail–sales, management, back office, shipping, etc.

Today, 46% of retail jobs are either in business-to-consumer (B2C) retailers–shipping, fulfillment, etc.–or in business-to-business (B2B) retailers–distribution, returns, etc.

The B2C retailer adds 25 million jobs in the US and, thus, the B2B adds 17 million jobs. Thus, the “inevitable obsolescence” of brick-and-mortar retail jobs is inflated.

In BusinessWeek (May 14, 2008), Gary Marcus and other retail executives predicted that, just 30 years from now, there will be no storefront employees in retail outlets and only 5 percent in B2C retail, and only 2 percent in B2B retail.

That also happens to be the same percentage of jobs that will exist in Europe.

So, why are so many people still excited about Brick-and-Mortar?

Because of the Digital Storefronts. Brick-and-Mortar is essentially a beige box (shopping cart) offering a few physical goods.

A digital storefront is a bright, interactive entity that provides the goods in many ways:

a URL allowing online shoppers to track their purchases and see where their products are sold.

mobile apps, with geo-location software, that not only generate location-specific display ads, but provide a one-way trail of mobile contacts between customers and product suppliers to be sent via email.

affiliate marketing networks that will credit your business with sales

social sharing (P2P) that can leverage the true strengths of your physical retail store

telemarketing that allows customers to deliver direct orders directly to the actual product at your store

remote payments to customers from a store associate that can track store sales (at stores in other cities)

Demented Shoppers:

1. Americans are value shoppers and we don’t tolerate items being $10, $20, or even $50 more than they need to be for us to buy them.

2. Americans do like price, particularly at the time of their purchase.

Dining out (Dining Out) fell to 9% of US restaurant traffic in 2008 (from 10%) and is not expected to return to 10% anytime soon.

3. Many American consumers don’t want to walk into a store and see all the merchandise.

4. Many Americans dislike “showrooming” (sneaking out of stores to browse online) and many know that there is always the other way out of their living room and/or their car.

5. Most products are priced on the price elasticity curve, with increased awareness triggering an increase in price demand, with increased price demand triggering an increase in price elasticity.

6. Entrepreneurs who choose to deliver their goods in a digital format and to sell their goods at low-cost in physical stores can be even more profitable with economies of scale and with having incremental growth opportunities.

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