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Stores Are Key to Omni-Channel Retail, Panelists Say

The rise of omni-channel retailing — in which mobile, online and in-store experiences complement rather than compete with one another — will lead to smaller but showier stores in coming years, said Vincent Corno, Saks Inc.’s senior vice president of real estate, at RECon.

Saks, which operates 42 Saks Fifth Avenue stores, 66 Saks Fifth Avenue Off 5th stores and Saks.com, is investing $100 million over the next five years to establish an omni-channel sales platform and “tear down the old silos” separating e-commerce and brick-and-mortar sales, Corno said.

In the future retailers will be less concerned with individual store sales and more focused on using stores as a brand statement driving sales across all the channels, he predicted.

“The four-wall sales-performance measure of a store may be obsolete in our lifetime,” Corno said. “Does the store manager get credit for the entire trade area’s e-commerce sales, or just for what happens within the store’s four walls?”

Because of the current growth trajectory of e-commerce, many retail real estate executives are finding it tough to get funds for physical expansion as websites are also in need of investment while offering a perceived higher return.

“When I go to the finance committee meeting, I’m competing with e-commerce for capital,” Corno said. “The disproportionate growth in e-commerce in the intermediate term reduces the appetite for new stores.” The trend will not last forever, he said. “Once e-commerce sales growth stabilizes in coming years, you could even see more brick-and-mortar growth.”

Saks is among other chains investing in this omni-channel future. Many, notably Macy’s, have begun folding their e-commerce sales into the brick-and-mortar same-store sales figures reported to investors, in recognition of how the two work together.

Macy’s is a trendsetter in the merging of channels and is managing to grow e-commerce and store traffic while experimenting with shipping web-based orders from brick-and-mortar stock rooms, said Lori Schafer, executive retail adviser for Middletown, Mass.–based SAS Institute, in a panel discussion. Some 9.5 percent of Macy’s sales last year were from e-commerce, Schafer said.

“Others are moving in that direction,” she said, “including Walmart, which is making corporate acquisitions in the e-commerce space; CVS, which now has a chief digital officer; and Staples, which has shrunken its store footprint and become much more omni-channel.”

Source: Shopping Centers Today Week