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Monday, December 1, 2014

Beginning in the mid-nineties, at least in the more technology-forward places, and continuing for approximately a decade, online merchants were running roughshod over the brick-and-mortar gang. The price differential betwixt identical products was so profound that many, man-on-the-street and retail industry expert alike, predicted the total demise of the retail store model that had held sway for hundreds of years.

Since that time, however, beginning perhaps with the emergence of Amazon.com that threatened not just electronics, or clothing and other categories that are well adapted to online marketing, but anything and everything, traditional retailers made the decision to not go down without a fight, realising that combining online marketing with a physical presence was the perfect strategy to turn the tables on online-only retailers.

The success of this strategy is clearly apparent to anyone with a sufficiently long perspective to remember the times when it was laughably simple to buy products online for about half the price of what a brick-and-mortar store was charging, and then compare that to the current environment, where the price differential is, for the most part, negligible or non-existent.

What does this current state of affairs imply for traditional small retailers? The biggest shift as far as customers are concerned is that it is no longer adequate to have a good location, an attractive and well-stocked store, and a knowledgeable sales staff.

Those three things are expectations that have developed over the course of generations of shoppers. Without them, a traditional retail business has little chance of long-term prosperity. History provides many examples of merchants who offered these and more, and yet could not keep the doors open.

Today’s customer is very likely to be highly knowledgeable on the price, features, and benefits of an item. The major difference is that rather than going to two or three stores to gain that expertise, they can visit dozens of online merchants, research prices and read reviews of products in the space of time it would take to go to one shop.

Unless your operation deals with something that is entirely unique and you have zero competition, an almost ludicrous proposition, combining online and brick-and-mortar retailing is essential to maintain the advantage that once belonged to online-only retailers, an advantage that now belongs to the operators who can offer not just digital convenience, but also all the sensual input that only comes from physical contact with a product.

This combination was and is the salvation of traditional retail. It was the step that proved the prophets of retail doom to be false ones.

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