“What Lies in Store for Brick-and-Mortar Retail as It Approaches $4.2 Trillion?” by Bryan Wassel via Retail Wire

“What Lies in Store for Brick-and-Mortar Retail as It Approaches $4.2 Trillion?” by Bryan Wassel via Retail Wire

Reports of brick-and-mortar’s death, dubbed the retail apocalypse during the height of the COVID-19 pandemic, were greatly exaggerated.

Physical store sales rebounded in 2021 as the omnichannel future came into focus, with total spending topping pre-pandemic levels. Now Forrester expects offline sales to hit $4.2 trillion by 2028 — up from $3.6 trillion in 2022 — and account for 72% of the total retail market.

Offline retailer stores experienced massive 14% year-over-year sales growth in 2021 and healthy 6% growth in 2022 as shoppers flocked back to in-person experiences and sought out bargains from retailers looking to offload overstuffed inventories. Forrester expects growth rates to slow to pre-pandemic levels now that the initial burst is petering out, but brick-and-mortar will remain a vital part of the overall retail industry.

Forrester tagged “tangible experiences, immediate gratification, physical product comparison, social interaction, and personalized assistance” as the key advantages offline retail has over its digital counterpart. Research has shown that touching products can make shoppers feel a greater sense of ownership over potential purchases, and while e-commerce is getting better at replicating this phenomenon, the advantage remains with physical stores.

U.S. online retail sales are still growing rapidly and will increase from $1 trillion in 2022 to $1.6 trillion in 2028, according to additional Forrester research. Online retail penetration will grow to 28% during this period, and a double-digit compound annual growth rate (CAGR) is expected for 11 product categories. Brick-and-mortar isn’t dead, but digital still has space to grow.

Of course, e-commerce and offline retailing are at their best when they work in tandem.

Forrester estimates that click-and-collect options — including both BOPIS (buy online, pick up in-store) and curbside pickup — will bring in more than $100 billion in 2023, with that number doubling to more than $200 billion by 2028. Click-and-collect is expected to account for 12% of U.S. e-commerce sales by that point.

The post-pandemic years have proven that even digitally savvy shoppers are interested in the social and tactile experiences only a physical store can offer, and Forrester’s predictions confirm that brick-and-mortar is alive and well. The primary question that remains is how retailers will evolve in the coming years to keep their stores compelling in a thriving industry.

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