With email, deal websites, forums, online-only sales, coupons and apps, shopping online has never been easier. Its simplicity might even cause you to wonder about the fate of brick and mortars. Will storefronts fade away in five years? Are malls going to slowly become obsolete like home phones or the cast of One Tree Hill?
“No,” says Craig Taylor, Vice President of Staples.ca
, the man behind one of Canada’s largest e-tailers for the past decade. Taylor has been behind multi-million dollar website overhauls, mobile app development and the most aggressive product expansion project in the history of Staples – and that’s just since February 2013.
Taylor went on to say that the misconceptions were rampant; we have misinterpreted the so-called struggle between online and offline retail.
“There’s an illusion in the market that the estimated $4 billion of online spend in Canada is suffocating traditional retail. That’s not the case,” says Taylor. In fact, according to a study conducted by Forrester Research, that $4 billion represents a mere 1.7% of all retail transactions in Canada. In other words, for every $100 that Canadians are spending, only $1.70 of it is online.
By 2018, the online share of retail is expecting to grow in Canada to 8%, according to the same Forrester study. This will represent a spike from the current $1,130 Canadians are spending online annually to $1,552. This projected share of market wouldn’t even bring Canada on par with the current U.S. percentage of online spend, which presently represents 8.5% of total retail spend. All of this perpetuates the misconception that one channel must suffer for the other to prosper.
Taylor presented the more likely relationship between the two channels: interdependence. Retail and online channels will have to continue to work in tandem for businesses to be successful. In the case of Staples, significant research indicates that positive in-store experiences drive customers to the online store. The correlation grows stronger when you factor in that Canadians spend a great deal of time researching their purchases online; Staples estimates 23% of in-store sales are researched on staples.ca.
“However, the emergence of e-commerce has forced us to change how we do business in some ways,” he continued. “Retailers across the board are ramping up faster and consumers are more educated than ever. It’s challenged us to tighten our shipping policies, offer better customer service through components like live chat, and expand our assortment by the thousands. If it wasn’t for online retail, you’d never think ‘Staples’ when shopping for roses
The connection between traditional and online channels has been the subject of debate beyond the sales mix; we needn’t look further than promotional strategy for another example of how skewed the perception is.
“Online promotions, specifically email, may be a cheaper way for us to reach our customers, but it’s our direct mail pieces that are still most effective,” says Taylor.
The approach, as Taylor put it, should be how each channel can complement the other.
“Rather than focusing on the decline of traditional retail being brought about by the emergence of online, we should be rethinking what brick and mortars should look like,” says Taylor.
“It’s not so much downsizing or eliminating physical retailers that businesses need to concern themselves with, it’s satisfying consumer demand in-store.”
The focus then reverts from increasing the size of each channel’s proverbial pie to growing the size of the pie overall. Businesses, ask yourselves: how big is your appetite?
Adam Rodricks is Staples Canada’s Social Media Specialist and the host of StaplesTechTV. A BBA graduate from the University of Toronto, he has worked in Marketing and Communications for Fortune 500 companies and as the Lead Gaming Editor at Operation Reality Gaming.