The relatively new channel of buying and selling via the Internet, E-commerce, is a booming source of revenue for many industries. With annual E-commerce sales projected to hit $278.9 billion by 2015 (Rogers, 2012), retailers and marketing experts are paying attention. As important as E-commerce is, there is still talk of the crucial importance of the in-store shopping experience. According to Forbes.com, “what sets truly innovative marketers apart is a single, counterintuitive insight: the in-store shopping experience matters now, more than ever” (McComb, 2012). If E-commerce and in-store experiences are to coexist in this multichannel shopping culture, retailers need to tailor their communication strategies and tactics to consumers via the brick and mortar store and the digital arena.
With the massive increase in Internet usage and the digitalization of many areas of life, a radical change in buying behavior has ensued. Online sales are not only generated additionally, but serve often as a substitute to brick-and-mortar retailing. Some product categories are particularly affected. For example, in 2013, 80.1 per cent of total sales of music and videos in the UK were generated online. Consumer electronics had to deal with an online share of about 42 per cent (SAS and Verdict, 2012). For 2020, different forecasts predict an online share of about 25 per cent for the non-food area.
Brick-and-mortar businesses have several distinct advantages over their online counterparts. Many consumers still prefer to liaise with people directly as they believe questions about products or services can be dealt with in a more comprehensive and immediate manner in a face- to-face setting. Brick-and-mortar businesses allow consumers to hold, try and touch items before they contemplate making a purchase — indeed 73% of consumers prefer to try before they buy, according to the International Council of Shopping Centers. Consumers often associate legitimacy with a brick-and-mortar business as a physical presence can foster a perception of trust.
To meet and fulfil the demand from consumers, the location of a store can be seen as critical. So the question is: how do companies choose the right store location? According to Craig et al., (1984) the decision for store location can perhaps be seen as the most important decision that must be made, since it addresses accessibility and can therefore attract a large amount of customers. Furthermore they state that since the investment is fixed and long-term, the choice of a poor location can be detrimental
Brick and mortar refers to a traditional street-side business that deals with its customers face-to-
face in an office or store that the business owns or rents. The local grocery store and the corner
bank are examples of brick-and-mortar companies. Brick-and-mortar businesses can find it
difficult to compete with mostly web-based businesses like Amazon.com Inc. (
the latter usually have lower
and greater flexibility.
Brick-and-mortar businesses provide consumers with instant gratification when a purchase is
made. As a result, consumers typically spend more than they intend to at brick-and-mortar stores.
The number of weekly brick-and-mortar shoppers has increased in each of the past three years,
from 40% in 2015 to 44% in 2018, according to PricewaterhouseCoopers' Global Consumer
Insights Survey. The report attributed the rise in physical store shopping to an increased
consumer desire for a more sensory and social shopping experience.
According to Berman et al., (2013), location is an expression for an ideal position for a certain store. However, the position for one store is not necessarily desirable for another, e.g. an apparel store benefits from a location closed to pedestrian traffic and close to department stores whereas for a convenience store it would be more preferable to be located in a place with ample parking and vehicular traffic.
According to Mucchielli & Puech (2004), two approaches are used when determining firms ́ internationalization. First, an identification of the possible incentives behind the firms ́ decision to produce abroad is made (`why do firms internationalize their activities? `). Secondly, the decision referred to choice of location is considered ( ́where do firms locate? ́). When a multinational firm chooses a location, several geographic scales must be considered. It appears to
them that multinationals first select a geographic area in the world, followed by country, region and finally the definite site for their investment.
A higher upfront investment implies a greater risk involved from the beginning. Rent, taxes, employees, utilities, etc. can build up a barrier to entry brick by brick. And if things don't go so well, you're out a lot more than just the cost of a website. Locations are supposed to work for you, but just because your store is sleek and mainstream, or adorable and inviting, doesn't mean your neighbors are following suit. You have no control over what goes on around your store, and what may have been an up-and-coming thoroughfare 5 years ago, could easily turn into no-man's land in the blink of an eye.
Click-and-mortar is a form of electronic commerce in which customers shop over the Internet on electronic retailers' websites, but are also able to physically visit the retailer's brick-and-mortar store. Click-and-mortar shopping provides customers with the efficiency of online transactions, as well as the face-to-face interaction of retail stores.
According to the investigation by the III (Institute of Information Industry, Taiwan) in 2002, the E-Commerce business models classification could be depicted as Table 1 shown. The investigation also found that 27% B2C business models had been profitable at all; however, 77% B2C firms predicted to be profitable within the next 2 years. It is apparently on the trend that E- Commerce
The Internet has contributed to a change in how businesses and consumers handle operations such as buying and selling products, as well as services, the search and management of
information, and payment methods. Additionally, it has created entirely new sectors within the economy and opportunities to create new products, services, and business models have blossomed and facilitated international trade (National Board of Trade 2012). Ecommerce is seen as a new area of trade where goods are electronically traded across borders. In broad terms, it is the production, sale, marketing and distribution of products via electronic 6 networks (World Trade Organization 2014). E-commerce has grown exponentially, which has enabled the opportunity for businesses to reach consumers in foreign markets in ways they were not able to do in the past. However, according to a study initiated by the National Board of Trade (2012), the cross border trade within the European Union is hindered by several legal barriers such as
prohibitions for e-commerce as a sales form, sale conditions, and intellectual property rights (National Board of Trade 2012).
The more rapid growth of online versus offline sales suggests that established retailers can benefit from the development of an e-commerce strategy. Indeed, earlier studies have indicated that in the post dot com crash era, established retailers have become increasingly more prominent online compared to Internet-only firms (Laudon and Traver 2003). E-commerce researchers consider the integration of offline and online channels to be a distinct e-commerce business model, which is usually referred to as a click and mortar or click and brick model (Steinfield et al 2002b)
With the increase in the population of Internet users and online retail sales, more and more firms are including the Internet (e.g. a Web site) in their channel strategies. However, many retailers have minimized their online efforts, continuing to sell via traditional offline channels. A variety of reasons contribute to traditional retailers' delay in adopting a click and mortar strategy. Here we briefly outline four barriers noted in the literature:
Click and Mortar Strategies Viewed from the Web,
1. The complexity in pricing and differences in channel and consumer characteristics make it difficult for the traditional retailers to reconcile their traditional operations with their online efforts (Viswanathan 2000).
2. The threat of channel conflict can inhibit e-commerce channel development. By channel conflict, we mean the difficulties that can arise when the same good or service is sold simultaneously in online and offline channels. Channel conflict is especially a challenge for click and mortar firms because of price competition: consumers can compare prices across online and offline channels and will ultimately extract the surplus created by lower costs and b) non- excludability: there is no reliable way for retailers to segment the market. As a result, it is fairly easy for consumers to switch channels in order to extract the greatest benefit (Chwelos and Brydon 2000).
3. Firms may suffer from a lack of resources, as the integration of online and offline channels requires investments in IT resources. Also, in order to realize the potential benefits of IT resources, investments in intangible assets, such as new organizational processes and structures, worker knowledge, and redesigned monitoring, reporting, and incentive systems, may be needed, all of which may be very costly to implement (Brynjolfsson et al.2002). From the perspective of the management of core internal business processes, Barnes et al. (2004) suggest that increased integration of e-commerce applications within existing business processes is inhibited by technological, sociological and economic barriers.
4. The use of established brands for the online operations of a firm may have a detrimental impact on firm's brand or may even marginalize firm's brand equity due to poor integration of operations (Saeed et al.2003).
Despite the rise of e-commerce, I find that brick and mortar shopping experiences grew faster than overall GDP after 2002. It may be true that Americans are spending less time at brick and mortar retailers – but retailers more than compensate by increasing the quantity of “free” experiences provided per hour. Consistent with the increased shopping output reported by retailers, shoppers self-reported lower stress levels during brick and mortar shopping. I argue that these changes are driven by competition from e-commerce, so the improvement in brick and
mortar shopping experiences can be viewed as an indirect productivity effect from the Internet. Focusing on the wholesale and retail sector, the post-2002 productivity slowdown shrinks from 0.98 percentage points per year to only 0.13 percentage points per year. Across the entire private business sector, the post-2002 productivity slowdown shrinks from 0.44 percentage points per year to 0.26 percentage points per year.
McComb, W.L. (2012). Clicks and mortar: Why in-store experience matters (now more than ever). Retrieved from http://www.forbes.com/sites/onmarketing/2012/06/11/clicks- andmortar-why-in-store-experience-matters-now-more-than-ever/.
Rogers, J.L. (2012, May 23). E-commerce: 5 things you need to know. Huffington Post. Retrieved from http://www.huffingtonpost.com/2012/05/23/E-commerce-5-things- youneed-to-know_n_1413544.html.
SAS and Verdict (2012), How the UK will shop: 2013, London.
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