Is Brick-and-Mortar Dead?

[Editor’s Note: Today, we have another guest post by long-time contributor Kosmo. He pleasantly surprised me with an article yesterday. It was quite timely because I was working on reviewing Kid Start-Up by Mark Cuban over on Kid Wealth.]

I live within a few minutes of one of the largest malls in Iowa. Historically, it has been a hotbed of activity. Recently, changes have taken place. The mall interior is only open until 7 PM on most days of the week (8 PM on Fridays and Saturdays). I can’t blame them for the shorter hours – there usually isn’t much of a crowd. The mall itself has changed, as well. A gym now popped up in the mall, swallowing up the space that traditional retail stores would have used in the past.

What Happened to Malls?

What happened? In a word, COVID-19. There has been a shift away from traditional malls for many years. One mall fifteen miles to the north essentially became abandoned before being reimagined as an outdoor mall with a variety of strip malls. Those strip malls mostly contain chain restaurants, so the retail presence of the past is gone. Another mall in my metro area saw the handwriting on the wall several years ago and rented out much of the facility as office space to the city’s largest employer. What once was a vibrant mall is now a lot of office space, a CVS, a couple of restaurants, and a handful of specialty shops.

But the trend away from the traditional brick-and-mortar retail experience accelerated during COVID. Many retail stores had no choice but to close their doors. Some were completely shut down, while others had curbside delivery of items.

The winners and losers

The biggest winner during this time was Amazon. People who already heavily used Amazon leaned even more on the e-commerce giant. The people who had never used Amazon – yes, those people do exist – gained their first exposure to Amazon.

They weren’t the only winners, though. Some traditional brick-and-mortar retailers pushed their chips into the middle and embraced the new economy. One of the local grocery store chains began waiving the fee for online delivery (subject to a minimum order). This was a godsend for people who hate grocery shopping (such as me). Click a few buttons to place your order, and a van would deliver everything directly to your house. After a while, the fee was restored. Some people paid the fee, and others pivoted to drive-up service (which was still free, subject to the minimum).

It wasn’t just larger retailers, either. Even smaller specialty stores began taking orders via email, phone, and websites. Even the less tech-savvy stores could take an order over the phone, request payment via Paypal, and handle curbside pick-up.  Some even partnered with a local food-delivery service to deliver a limited selection of items.

Stores that weren’t able to adapt as quickly suffered. A competing grocery store chain was slow to implement online ordering. They also had less capacity, a worse process (especially for some frozen items), and lost market share.

Many other smaller stores couldn’t adapt or tried to adapt and still lost to the Amazon juggernaut. People realized that Amazon was a one-stop shop – if you need some screwdrivers, a porcelain elephant, the collected works of Poe, and a few scented candles, you can pop them into your cart and have them delivered to your door within a couple of days.

What about me

I absolutely hate shopping. I’m not a browser – I usually know what I need to buy and want to make the process as short as possible.

We began doing grocery pick-up during COVID-19, and it’s still our primary mode of grocery shopping. We’ve noticed that the prices are slightly cheaper if we go into the store. However, this seems fair, since the store is providing us with a service.  Every time I enter a grocery store, I remember why I hate grocery shopping.

We’ve always been heavy Amazon shoppers and have increased our Amazon shopping a bit. However, we’ve also added Target and Walmart deliveries and curbside pick-ups to our e-commerce profile. We don’t really need to browse when buying toilet paper, detergent, and garbage bags. We just want those items to get from the retailer to our house with minimal effort.

I’ve also begun expanding my portfolio of online merchants – going back to eBay, as well as purchasing many items from HipStamp (postage stamps) and AbeBooks (a division of Amazon that specializes in used books).

Fun fact: the industry term for Buy Online, Pick-up In Store is BOPIS. So when you order a pizza from an app and drive across town to pick it up, you’re engaging in a BOPIS e-commerce transaction.

The future

What does the future hold? Will we see a reversion back to a more traditional retail model, with brick-and-mortar stores as a major player?

I believe the answer to that is no. There was a segment of the population that had limited exposure to e-commerce before COVID-19. Instead of those people gradually gaining exposure to e-commerce, it happened suddenly due to COVID-19.  That toothpaste isn’t going back in the tube, so to speak. Many of those people are older, which actually makes e-commerce very convenient for them – being able to order online without leaving their houses, especially when the weather is hazardous.

On the other side of the spectrum are teenagers. In past generations, shopping malls and movie theaters were common gathering places for teens. Now, they’re more likely to hang out at someone’s house, eating pizza and choosing movies from various streaming services. The seating is more comfortable, and the selection of movies is much better. This generation grew up on the Amazon experience.

Related technologies

Even when physically going to a restaurant, I often use an app or a kiosk to order. The error rate on orders has been lower using this method than speaking to a person at a cash register. When placing an order at the restaurant, background noise or other distractions can cause the cashier to hear something incorrectly. This recently happened at a kiosk-less Burger King, where I ordered a double bacon cheeseburger, but the cashier thought I said a double bacon cheese Whopper. The apps and kiosks also make using coupons and collecting loyalty rewards easy. That can lead to free fast food. I can use the same coupon multiple times at Subway – without needing a physical coupon. My go-to codes are SUB399 for a $3.99 6-inch sub and MEAL599 for a $5.99 6-inch meal. It saves me a few bucks on the Supreme Meats sandwich or meal. [Editor’s Note: There are usually codes online for buy one, get one free on footlong subs. It’s a cheap, quality dinner for the family.]

Schools aren’t really retail establishments, but they do have a brick-and-mortar presence. Some apps make it much easier to track students’ progress. I can quickly check to see how my 10^th grade and 8^th graders are doing and encourage them to work on a big project that is due soon. The schools also pivoted to online parent-teacher conferences during COVID. This is incredibly convenient – sign up for a time slot and join the meeting at the assigned time. This makes it easy to attend conferences with many teachers in one night, as opposed to the free-for-all at the school, with everyone showing up simultaneously and waiting in line to see a teacher.

What about you?

I’ve told you my thoughts on trends and my personal experience. What about you? Do you believe that brick-and-mortar will make a comeback? If so, what will drive the resurgence? Are your transactions mostly brick-and-mortar or mostly e-commerce?

[Editor’s Note: It’s me, Lazy Man, adding my two cents to Kosmo’s thoughts.

I recently came back from the American Dream Mall in New Jersey. It’s designed to emphasize experiences such as a water park, ice skating, and skiing. They still have retail, but it’s separate. This is a better model for malls to emulate going forward.

I personally LOVE grocery shopping. It’s my happy place. I can go during off hours, compare prices, and hunt for deals.

As for school conferences, the school has always had parents sign up for a specific time slot. We get face-to-face contact without having to wait in line.]