Store Real Estate Shifts for New Digital Reality

Posted on June 20, 2014 by Bud Morris
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Store Real Estate Shifts for New Digital Reality

Posted on June 20, 2014 by Bud Morris
 

Lest anyone doubt it, the e-commerce buzz in this country continues. And so we wanted to follow up on our June 4 post – “Digital vs Bricks and Mortar – Who Will Prevail?”

Canadian businesses oversaw the digital exchange of more than $136 billion of goods and services last year. That, says a new report from Statistics Canada, was up from $122 billion the year before — a 12 percent hike. And the fitting majority of this electronic activity — 61 percent — came from the wholesale trade, manufacturing and retail industries.

As such, it’s not surprising that retailers that up until recently have clung stubbornly to their brick-and-mortar roots, are now dipping branches into cyberspace. Somewhat more surprising? That they’re doing so at the expense of their physical store space.

Brand-name shops like Toys “R” Us and Best Buy told a crowd at a recent Retail Council of Canada conference (Store2014) that they have plans to reorganize their domestic divisions’ planograms to make room for expanded storerooms that can accommodate stock earmarked for fulfilling on-line orders. New offerings from these retailers will invite shoppers to pick up electronically placed orders in store.

Such efficiency-focused retail transformations mean in-store inventory gets reduced, and physical shops increasingly take on the role of showrooms for purchases made over the Internet.

They also suggest established Canadian merchants are acknowledging the disruption posed by established e-commerce giants like Amazon.com, a realization their American counterparts arrived at much sooner.

“The death of bricks and mortar, I’m here to say, is greatly exaggerated,” Canadian Tire president Michael Medline told conference attendees. “But we need to be good at both. We have to put huge resources, time and money behind [e-commerce] and the new world.”