What’s Old is New Again: The Rebirth of Brick-and-Mortar

Irony is often used as a literary device to show the audience traits of a character or situation that are unknown to the story's players. Life often does imitate art, and the world of retail is currently finding itself in its greatest irony in decades: the rise of brick-and-mortar in the omnichannel universe.

Since the dawn of e-commerce, successful retailers have taken for granted that digital was the future and scrambled to claim the space. Indeed, shoppers have moved online; but much like home video didn't kill movie theaters, e-commerce has interwoven itself among the retail fabric alongside brick-and-mortar and formed a symbiotic relationship. We call it omnichannel.

This explains why pure digital plays like Warby Parker are starting to open physical stores. Even L.L. Bean, which has relied primarily on its catalog for over 100 years, is tripling its brick-and-mortar presence. And therein lies the omnichannel irony: the struggle that brick-and-mortar retailers faced in the 90s and 2000s to adopt digital strategies is experiencing a reversal, with purely online companies expanding to the physical world.

Even though brick-and-mortar sales are contracting, they still account for more than 90 percent of the overall $4.12 trillion retail market. That's reason enough to attract retailers to the space, but constructing a network of stores strengthens service levels on every channel and gives retailers tighter control over inventory.

Stores: The New Fulfillment Center
With the maturation of e-commerce and the number of shoppers who grew up digital increasing by the day, consumer expectations are spiking. Modern consumers demand fast, trackable shipping, and they want it for free. Delivering on that expectation used to require costly distribution centers across the country. At the very least, one was needed to serve each coast. Today, integrated point-of-sale and e-commerce software make it extremely easy for retail stores to double as fulfillment centers.

Some national retailers began experimenting with selecting strategically located stores to fulfill online orders a few years ago, but the current paradigm calls for every possible store to double as a shipping center. This increases the reach of overnight and second-day deliveries at standard shipping rates to more customers and opens up every SKU in inventory to all sales channels. However, the most valuable effect is store fulfillment completely eliminates the need for expensive warehouses.

This new attention on brick-and-mortar also opens the door to a fulfillment strategy that's making huge waves in many verticals: buy online, fulfill to store. Consumers love this option because it combines the instant gratification of physical shopping with the navigation ease and product selection of e-commerce. When customers fulfill to store, retailers are provided an opportunity to convert on additional merchandise when the item is picked up.

Dynamic Inventory Management With Fulfillment Logic
Seasonality and regional variances in taste force retailers to guess demand levels for merchandise to stock inventory appropriately. Advanced analytics and demand forecasting have made this process more scientific, but there's still a great deal of unpredictability, especially in segments like high fashion apparel. Sometimes it's just a shot in the dark.

Omnichannel fulfillment provides a cushion for the impossibility of perfect demand forecast accuracy by opening all inventory to consumers everywhere. Suppose a fashion takes off on the East Coast, but never catches on west of the Mississippi. Instead of facing out-of-stocks on the Eastern Seaboard while West Coast stores drown in excess inventory, orders can automatically be fulfilled from the stores carrying the most stock.

Automated fulfillment tools make this process instant, using thresholds set by retailers. Prioritizing a variety of triggers like proximity and inventory availability, inventory imbalances are minimized while customers receive the merchandise they want quickly. This level of integration not only merges POS and e-commerce inventory, it arranges and fulfills every SKU into a single stream that automatically remains in optimized balance.

As existing brick-and-mortar retailers begin fully leveraging the power of their stores and e-commerce pure-plays expand into physical channels, the business and consumer advantages of omnichannel are exploding. The smartest retailers don't find it ironic at all.

Ian Goldman is president and CEO of Celerant Technology, a provider of a real-time POS retail management system.