Will 2018 mark the brick and mortar comeback?

 E-commerce has dominated the retail landscape, but are brick-and-mortar stores poised for a comeback?

E-commerce has dominated the retail landscape, but are brick-and-mortar stores poised for a comeback?

Is e-commerce hitting a ceiling? Or is brick and mortar back in style? In November, consumer spending at brick and mortar stores increased by 0.8%, exceeding economists’ expectations by 0.5%. These gains were also coupled with e-commerce growth, indicating Americans are simply spending more this holiday season.

While overall spending and growth rank highest in the years following 2009, these increased figures are not equally matched by income gains. This concerns economists as Americans dip into their savings and increase overall debt. A correction in spending may follow in years to come to compensate for overspending.

Brick and Mortar Market Share

However, what’s most interesting about the 2017 holiday season is the rebounding market share of brick and mortar shopping. While the publicity surrounding retail is primarily ominous, retailers are getting smarter about managing inventories and enticing shoppers to come shop in person.

According to the Wall Street Journal, gains were realized across all shopping verticals in November (in-store, ecommerce and non-store) with the greatest market share in brick and mortar at $238.84 billion versus e-commerce at $200.15 billion. Compared to last year, retail sales are up 3.6%.

Brick and Mortar Growth in Specific Sectors

The increase is not evenly distributed, though. Some retail stores still suffer from decreasing traffic, while others are experiencing a steady rise. Managing Director at Fung Global Retail & Technology, Deborah Weinswig, reports big box retailers such as Walmart and TJX companies see in store traffic going up while companies like L Brand and Victoria’s Secret are hit with double digit declines up to 16%. Conversion rates, how many shoppers actually make a purchase, are also up by about 0.5%.

What does all of this mean for retail? Is brick and mortar back? Or are Americans just spending more across all retail verticals? Weinswig’s analysis reveals a shift in consumer preferences. It tells us that big box stores remain popular amongst brick and mortar shoppers while specialty clothing and department stores are migrating online.

Big box stores present advantages in the brick and mortar environment for consumers as they provide one-stop shopping solutions at low prices in heavily trafficked urban and suburban areas. Many also now provide options to buy online and pick up in store. Clothing and specialty brands tend to offer more selection and availability online and allow for shoppers to avoid crowded malls.   

Into 2018, expect increased traffic to DCs catering to ecommerce markets. Brick and mortar gains will most likely increase for big box retailers like Target and Walmart. Transportation providers in turn will see their business reflect the changes in consumer preferences. Overall, spending and increased shopping regardless of method bodes well for the transportation industry.

Stay up-to-date with the latest commentary and insights on FreightTech and the impact to the markets by subscribing.