Don’t shutter that store! Bricks impact clicks
A new International Council of Shopping Centers (ICSC) report echoes earlier studies showing how retailers get a boost in web traffic from having physical stores. But a much larger payback was found this time to come from store openings and a smaller drawback from closings.
The study, “The Halo Effect: How Bricks Impact Clicks,” found:
- Opening a store leads to a 37 percent average gain in overall traffic to a retailer’s website and increases its share of web traffic within that market by an average of 27 percent;
- For emerging brands (less than 10 years old), store openings drive an average 45 percent increase in web traffic following a store opening versus a 36 percent boost for established retailers.
The study looked at more than 800 individual stores covering 145 U.S. markets and more than 4,000 consumers.
”That new store serves as a constant billboard in the customers’ daily travels, helping reinforce the strength of that brand and the presence of that brand,” said Michael Brown, partner in A.T. Kearney’s consumer products and retail practice, in the study.
By comparison, a store closing causes a four-percent drop in share of web traffic on average. Closings, however, were found to affect retailers differently, depending on the number of stores shuttered versus the total number of locations. For instance, the share of web traffic across the markets where one retailer closed declined up to 77 percent.
The study said retailers need to consider how the presence of stores sustains the “mutually beneficial relationship” between physical and digital, including enabling the touch and feel merchandise and supporting online returns and other omnichannel offerings.
“Do I serve a market area with five stores and my web capabilities or do I look at having three stores and a fulfillment center supporting the omnichannel experience in that area?” said Mr. Brown. “On the flip side, do I want a store that delivers marginal profitability at that location but contributes to the overall profitability of a market because we understand the positive impact of the halo effect? We have to look at the integrated contributions.”
- ICSC “Halo Effect” Study Finds Physical Stores Drive Increase in Online Traffic and Brand Awareness (press release) – International Council of Shopping Centers/Business Wire
- The Halo Effect: How Bricks Impact Clicks (study) – International Council of Shopping Centers
DISCUSSION QUESTIONS: Should the potential of eroding web traffic be a concern when retailers consider store closures? What insights from the study do you find most meaningful regarding the symbiotic relationship between physical and digital?