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Holiday Retail: Five Reasons Stores Are More Essential Than Ever This Year

September 7, 2022
Holiday Retail: Five Reasons Stores Are More Essential Than Ever This Year

It’s less than 90 days until Black Friday, and this is already shaping up to be a pivotal holiday season for every brand and retailer. Increased demand from shoppers, potential logistics issues, and rising digital acquisition costs are coming together to make having a brick-and-mortar store even more important this November. In short, brands need to launch or expand their physical footprint to maximize sales and customer acquisition during this crucial period. An omnichannel experience is what shoppers have come to demand during the holidays, and that experience isn’t possible without a physical retail location.

Leap is deploying stores with brands like Goodlife Clothing, HOBO Bags, and Sunday Citizen in time for this busy period—and are still able to do so for brands that act fast. Let’s dive in-depth into why brands like these are prioritizing retail stores for the holiday season.

1) Holiday Shoppers Demand Omnichannel

Ecommerce has continued to expand, but did you know that shoppers still made 76% of their 2021 holiday purchases in brick-and-mortar stores?

Physical retail is far-and-away the primary channel for holiday shopping, and this shouldn’t come as a surprise. Many Holiday shoppers want to be able to find and discover gifts for multiple family members and friends in a single trip. When shopping in person, they can do just that while consulting with store staff, trying the product for themselves, and getting immediate satisfaction from their purchase.

That said, shoppers also crave the convenience of a fully omnichannel shopping experience. Today, in-store shopping influences 60% of all online purchases. If your customers find something perfect but discover it’s not in-stock, they expect an associate to be able to order it for them online or at another location. If their ecommerce purchase ends up not working out, they want to be able to return that item in-store, or pick something else up curbside.

This shift in expectations is why Salesforce predicts that retailers with physical stores will grow sales 1.5 times faster than those without. This omnichannel experience increases engagement and loyalty to brands, meaning omnichannel customers have a 30% higher lifetime value than those who shop using just one channel alone.

2) Brick-and-Mortar Stores are More Cost-Effective than Ecommerce During the Holidays

A number of factors could complicate the holiday shopping period this year—factors that physical retail stores can offset.

There is a chance that shortages of raw materials like plastics, aluminum, semiconductors, building materials and more may impact the availability of certain products in stores come this fall. This could encourage customers to shop more in-store so they can be sure they will find what they need on hand.

The Producer Price Index for July is also up 10% from a year ago, meaning that the cost of goods is still rising. This combined with the rising cost of first- and last- mile logistics will mean that ecommerce-only brands will have to compensate with higher prices for their products and higher charges for shipping and returns. Brick-and-mortar stores defray some of this cost by reducing returns, acting as a fulfillment center locally, and allowing for better control over pricing integrity.

This is why executives are prioritizing AOV this year—to offset rising costs and keep a healthy margin. According to Ricardo Belmar, Director of Partner Marketing for Retail and CPG at Microsoft, these executives are finding that the cost of ecommerce is rising higher than expected, and that a brick-and-mortar store ends up being more affordable than ecommerce for brands and customers alike.

NAADAM West Village's window display on Bleecker Street.

3) Shoppers are Excited to Return to Stores

If last year is anything to go on, there is a great deal of pent-up demand for holiday shopping.

The 2021 shopping season’s total retail sales growth was the highest it’s been in decades. The 14% spike we saw last year was 50% higher than the next-highest holiday growth period in 1999. Store sales bounced back impressively, rebounding 15%, with 82% of that growth driven by the brick-and-mortar channel. With COVID numbers and supply chain disruptions lower than last year, we can expect an even bigger return to stores.

For brands, this means more than increased sales, it also means more new customers.

Customer acquisition costs have risen by 60% over the past five years. The impact this has had on brands’ margins and profitability is hard to understate. That is why a physical store is such a powerful channel—it doesn’t just move product and drive sales, it is a highly effective source of customer acquisition.

4) The In-Store Experience is More Crucial Than Ever

According to Retail Touchpoints’ 2022 Customer Loyalty Survey, 49% of respondents said that in-store interactions with associates was one of their top tools for customer acquisition, and 62% said in-store relationship-building was a top tool for retaining customers.

Their storefront is where the majority of brands build deeper relationships and stronger loyalty among their shoppers. As it’s the time when many brands will have their first or their most interactions with their customers, the holidays are essential for building up the engagement and goodwill needed to sustain their business for the rest of the year.

However, this is easier said than done: 41% of retailers cited insufficient staffing’s negative impact on their in-store CX as a challenge for 2022. That’s where a turnkey solution like Leap can help, managing staff and pulling from an existing talent pool to make sure every brand’s location is delivering against the experience their customers expect.

5) Holiday Shopping Has Already Begun

If you want to take advantage of your retail channel for the holiday season, then you need to hurry. Holiday shopping starts earlier each year, with some now marking Amazon Prime Day as the kickoff. In fact, 38% of those who shopped on Prime Day 2022 said they purchased holiday gifts during the sales event.

According to Salesforce research 42% more shoppers worldwide plan to start buying gifts earlier, many to avoid potential inflationary price increases. For many brands this means offering more discounts and sales earlier and earlier in the year. It’s a legitimate tactic, but retailers should also beware of over-discounting and leaving money on the table. One of the benefits of physical retail is that shoppers buy more impulsively and are less likely to abandon their carts in person, making it easier to sell-through product without steep discounts.

There’s Still Time to Open an Immersive Store this Year

With 76% of holiday sales happening in brick-and-mortar stores, this is the optimal time to open your next retail location. The combination of our platform, in-house capabilities, and access to premium locations means we're able to deploy fully-immersive branded retail stores in as little as 90 days. With Leap, you can build your brand, engage your customers, acquire new shoppers, drive incremental sales, and fuel momentum into 2023. Don’t get left in the cold, prepare for the holidays and 2023 with Leap. Contact us today.

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