Retail v Wisconsin

E-commerce killing off brick-and-mortar? Not yet, says CBRE

E-commerce killing off brick-and-mortar? Maybe not, says CBRE,ph01

Is e-commerce killing brick-and-mortar retailers? You’d think so by reading the headlines. And the constant news of major retailers closing locations does seem to indicate that while online sales rise, transactions at physical stores must fall.

But a new report from CBRE actually suggests that a growing number of retailers have figured out how their brick-and-mortar locations can actually help drive their online sales.

CBRE’s report, “Is the E-pocalypse here?” contains plenty of interesting findings. Chief among them? Brick-and-mortar retailers today account for about half of all online retail sales and related activity.

According to the report, a growing number of traditional retailers have evolved into omnichannel merchants, meaning that they are operting both online and physical stores. CBRE found that retailers who once operated only traditional brick-and-mortar locations now generate slightly more than half of all the online sales completed in the United States.

At the same time, traditional retailers are expanding into more U.S. distribution space than are their online-only competitors. These traditional retailers accounted for 58 percent of new leases for retail supply chain space – retail-specific warehouses and distribution centers – in 2015 and 2016. Companies that focused only on e-commerce claimed just 32 percent of these new leases, while wholesale-only retail users claimed 10 percent.

“Physical and online sales aren’t mutually exclusive,” said Melina Cordero, head of retail research for CBRE. “Modern, adaptive retailers have embraced e-commerce as one of several channels to best serve customers. And shoppers increasingly research products both online and in stores before making their purchases.”

Here’s some other good news for traditional physical retailers: CBRE found that more than 90 percent of all retail sales still take place in physical stores.

“Consumers expect their experience with retailers to be seamless, whether they’re researching the product online and buying it in the store or vice versa,” said Brandon Famous, CBRE retail leader for the Americas and co-lead of the Omnichannel Real Estate Practice. “Retailers that make the investment to build and perfect truly omnichannel networks are ensuring the long-term viability of their brand in the changing marketplace.”