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Retail versus e-tail: Is retail still relevant in today’s digitalized

By Nermin Camo, Colin Jansen, Karthik Narayan & Sophie Tu.
In this essay we argue that retail can still be relevant, but in order to be
relevant it needs to keep up with changes in its environment like the digitalization
of society. Therefore we suggest that it is not a competition between retail and etail, but rather an integration of both. We start with the current state of retail to
provide a foundation for this essay. We continue with showing how e-tail has
been growing significantly the last decade and the various aspects that traditional
retailers lack. Yet, retail also has its advantages. We draw upon multiple
examples to show how retailers can and should use these unique selling points in
order to stay relevant. In our last section we show successful examples of
retailers that integrate retail and e-tail and we draw upon van Tongeren’s model
(2013) to argue that an omni-channel strategy updates and integrates the whole
retail formula and therefore shows that retail can be relevant. Therefore we
conclude that retail has the potential to be relevant, yet retailers need to put in
effort to combine the best of both retail and e-tail in order to be successful.
Retail Times Are Changing
“Retail guys are going to go out of business and ecommerce will become the
place everyone buys. You are not going to have a choice.”
- Andreessen, 2013
When reading articles and watching figures, retail stores seem to be destined
to go astray. January 2013, Andreessen, co-creator of Netscape and an
established venture capitalist in the Silicon Valley, announced the certain death of
brick and mortar (Lacy, 2013). Julie Bornstein, online strategist at Sephora shares
this pessimistic perspective: “I definitely think in certain industries, there is truly
no purpose in having a retail store anymore” (Mitroff, 2012). Figures also seem to
support online shopping. Forrester Research announced a growth of 13% to
$262 billions for the 2013 US online sales (Indvik, 2013). In a more long-term
vision, the research firm expects the US online retail sales to reach 10% of the
total sales in 2017 crunching the offline retail stores shares (Indvik, 2013). When
looking at this trend, it is important to understand the underlying reasons why
customers are more and more purchasing goods on the Internet compared to
physical retail stores.
A focus on particular industries, such as apparel, entertainment or
electronics, shows a few reasons why the retail landscape is changing. Among
others, the entertainment industry is suffering from a dematerialization, the
electronics goods are easier compared on the web thanks to reviews and blogs,
the best bargain is found effortless and apparel choice range is wider and more
organized on the web.
As we outlined earlier, the entertainment world has been witnessing a
dramatic change with the digital generation: video games are available online, for
instance on the XBOX marketplace, ebooks sales outstripped the printed books
sales on Amazon in 2012, CD music supports are replaced by direct streaming
like Spotify or Deezer, and movies are watched on demand through Netflix or
other platforms (Malik, 2012). This dematerialization of the entertainment world
has lead two large offline retail shops from this industry to retire. Indeed, Virgin

has proven that the rich social dialogue between him and the clients creates brand loyalty.Megastore filed bankruptcy in January 2013 in France and Free Record Shop followed in May in the Netherlands (van Kampen. Mitch offers his service. Also. it varies from product information. the face-to-face encounter is essential. When talking about the large range of information available. The never ending queue in the Champs Elysées in Paris to enter the world of Abercrombie & Fitch is the proof that traditional retail can provide an experience that a webstore never will replace. cheese and more. from January 2012 to November 2012. The customer is empowered with a wide range of information not available in store but online.two way dialogue . An academic assignment had led the authors to visit the Red Wing Shoes shop in Amsterdam. their function is still focused on service. physical stores can still defend themselves. The interview with the shop manager Mitch.make offline retail struggle for their survival (Lecinski. This foodmarket includes actual kitchens with professional chefs to actually experience the food. Besides our surroundings becoming more and more intangible. 2013). 2013). wearing the brand from head to toe. In this case. Forrester Research forecasted for the online sales. Men and women respectively qualified as handsome and beautiful. Yet. his knowledge and passionately talks about the brand. the American apparel brand Abercrombie & Fitch has also understood the power of experience. 2011). according to GfK Market Research. However. Although figures and business articles put traditional retail in a bad light. clients gather around the brand. the Jumbo supermarket chain in the Netherlands has used this strategy to stay relevant. the apparel company has doubled its revenue in only one year (Delorme. The apparel industry is not spared in this ‘battle’ as well. the staff is mainly staged as decoration. it has a foodmarket café which is aimed at creating an enjoyable grocery experience. The rising apparel retail star appeals to the consumer due to the immediate large selection of brands. reviews and tips from customers to price or product comparison and so on. First. Willsher. best deal and social engagement . an experience. it has opened a Jumbo “foodmarkt” (Riedeman. the free delivery and return has cured online orders from a traditional disadvantage. online sales increased with 9. The industries presented have been suffering from the Internet because of the dematerialization of goods. Next to that. As an example. And this switch of power is particularly visible in the electronics industry since the actual purchase of an electronic good is seen as an investment. welcome the customers into a shop which almost resembles a private flat party. The success of the intangible retail is perfectly embodied in Zalando: with sales equivalent to 1. and experts on wine. 2013. in other words. the larger information accessible on the web and the convenient and abundant choice available anywhere at anytime. These aspects are obviously transposable from one sector to another.15 billion euros in 2012. as a result. These online decision-making steps . brick and mortar invites people to a shop: it is seen as an event. 2013). Indeed. 2010).also invite the customer to purchase online (Rigby.3% in 11 European countries whereas offline sales dropped with 3.2% (Press releases. Besides the food market. girls and boys can take a picture with the gatekeeper – one of the “handsome” staff members – to remember the experience. these are not the only advantages of online sales or drawbacks of offline retail: the fast check out. . a growth of 2 points to reach 14% of the total sales in the US between 2013 and 2016. This part is a key element in traditional retail.called zero moment of truth . Also. the Internet has created a new step in the purchasing process. 2013). time saving.

For instance. Amazon. a wellknown international apparel retailer. Sarenza and Zalando are arranging this benefit. face-to-face experience. Although the delivery time has a minimum limit and cannot be characterized as immediate as brick and mortar. designed by van Tongeren (2013). Yet. Yet. online retail is also acquiring these strengths. When we take a look at ZARA. both channels have their unique selling points and in the next section we will argue that these channels are not mutually exclusive but can be integrated to create a complete retail formula that is relevant in today’s digital society. What also characterizes the added value of the Amsterdam Red Wing Shoes store and other traditional retailers is the selected assortment. This is clearly shown in the Retail Platform Development Model. free deliveries and returns are offered more and now proposes the Amazon Prime account to its customers. try them out and if needed. This shows that digital integration is needed in order to be a successful apparel retailer.This community can be evaluated thanks to social media such as Facebook or Instagram with respectively 2. As we have showed. Integrating Retail and e-tail In order to stay relevant the retail formula should incorporate the e-tail aspects instead of competing against it. Retailers that integrate on.and offline aspects are ahead of their competitors and enjoy a lot of publicity as well as a higher generation of sales. which ensures a free shipping in two days maximum.126 and 8.S. recent research has shown that already in 2012 more than half of the apparel sales are influenced by online sources in the U. An event. as well as see whether certain products are in stock in nearby stores. Indeed. where online activities and digital integration are elements next to for instance the ‘usual’ price and packaging decisions.687 followers for the Amsterdam store alone. . we see that it is possible to be relevant in a digital society. offline shops only present a careful selection. Therefore the latter should be aware of its position and update current strategies to stay relevant. This is why in Saint Germain des Pres in Paris unique boutiques with their own personalities are still relevant and known around the world. apparel retailers benefit from the fact that people want to try things on. To only name a few. especially in the apparel industry. Still. service and selected assortment seem to enlighten the path of traditional retail and these strengths are undoubtedly not the only ones. not only online but also in store. With this app they complement the retail stores with a focus on the customer. (Seghal & Mulpuru. Instantaneous feeling stands for the fact that there is an immediate gratification when purchasing the product. ZARA has launched a mobile phone app on which customers can look for inspiration. The ability to try out products is commonly presented as advantage of physical stores. This shows how digital integration can help to increase sales. ASOS. to return them without any cost. online retailers are making efforts to provide the same service. These web stores have also understood the pleasure of instantaneous feeling in traditional retail. 2012). Whereas online shops provide all the possibilities. online companies are reducing it drastically. As we have indicated. It therefore allows the customers to order several products. These two examples clearly online retail is catching up with traditional retail and proposing more and more possibilities and advantages.

and in the store have their path set out for them making the shopping experience a lot better (Starkenburg. has adapted its retail formula based on the context and the customers that use it. Johnson & Digital integration and consistency is of high importance and can add value at any moment in the customer journey. 2013). Online Retail Sales to Hit $370 Billion by 2017. Next to that online medium. 2013) have been developed to aid the retailer creating an omni-channel strategy where on. 2010). Indvik. AH delivery service and most recently AH pick up points 1.and offline complement each other. Available: http://mashable. Forrester: U. L.S. (2013). There are possibilities for an omni-channel strategy in every retail formula. AH to Compete Apparel study: The role of mobile and video in the apparel shopper digital path to purchase. a Dutch supermarket chain.pdf. L. Bibliography: Delorme. Google. 1 http://www. The retailer can play a supportive role in these channels by offering added value to the customer wherever they are. multiple experts have seen this grow and tools. although this mostly happens at home it is important to notice that 31% uses those devices in store (Google. These channels are supported by their website where people can do their groceries as well and choose to have them delivered at home or at work or decide to pick them up at a time that suits them. Research shows that 24% of U. Available: http://media. This shows that the different channels can add value for the customer at different places in their customer journey and therefore the retail concept stays relevant in the digital society. Retail and e-tail both have their advantages and using these advantages in an integrated retail formula will allow entrepreneurs to fully exploit its potential. including social media and mobile shopping media.ah. Last accessed: 28-05-2013. Communiqué de Presse Zalando. and will grow even more the next decade (Mulpuru. Research shows that e-tail has been . Google Think insights. (2013). In the last decade it has expanded its normal supermarkets with AH XL supermarkets. like the Retail Platform Development Tool (van Tongeren. Albert Heijn for example. This omni-channel strategy involves contact with the customer via different channels.ztat. 2012). yet not all retailers are fully exploiting this potential.S. Last accessed: 27-05-2013. Conclusion Building upon our previous sections we conclude that retail has the potential to be relevant in today’s highly digitalized society. 2012. customers in 2012 use their tablets or mobile devices on a daily basis for shopping. Luckily. As posed by van Tongeren (2013) the omni-channel strategy can play an important role in staying relevant to the customer because different channels can complement each other instead of compete. they have an mobile app on which customers can use to make their grocery list at home.Another important aspect of staying relevant also comes from integrating retail and e-tail.

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