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Evolution of Retail: Death of the Brick & Mortar?

The latest reports for 2019 show that there has been a deceleration in retail sales growth. While total retail sales have decreased, ecommerce sales have increased by double digits, marking the first time the two have headed in opposite directions. The fastest-growing ecommerce categories are traditionally strong brick-and-mortar retailers that are adjusting to these growing online trends. This reflects just how important it is to utilize existing brand equity into strong ecommerce campaigns.

While new innovations and faster and more convenient checkout methods continue enticing shoppers to transition to online buying, it begs the question: What is the brick and mortar retail sector doing to compensate for these lagging sales?

One interesting trend we now see, specifically in higher-end department stores, is the utilization of in-store cocktail bars. Destination dining and coffee bars are nothing new within luxury department stores. This trend started in the late 90’s and has seemingly staled with the public. It seems as though retailers are finally taking note of what Vegas casinos have known for decades now: alcohol provides a looseness that encourages greater time within your walls as well as higher spending. In addition, alcohol sales hold higher profit margins, thus creating an additional revenue stream to increase lagging earnings.

Nordstrom, Saks Fifth Avenue, Neiman Marcus and Bergdorf’s have all opened bars in flagship locations recently. If Sex and the City were still around, I have no doubt we would witness endless scenes of Carrie and Samantha indulging in their fair share of $20 cranberry cosmos while navigating racks of designer clothing. Even grocery chains like Whole Foods have implemented in-store bars so that you can drink while navigating their endless aisles. Alcohol, once an outlier in movie theaters and only available in full service venues, is now the norm across the vast majority of theater chains.

Experiential destination shopping will be the evolutionary trend for retailers in 2020. With ecommerce continuing to traject record growth, consumers must be persuaded to leave the comforts of their own home. Retailers are banking on strong bar programs to quench your thirst and perhaps encourage just one more little black dress or tie to be added to your closet.

Jonathan Szedeli

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