search

The Real Deal Logo

Trending

Starwood REIT quickly burning liquidity Starwood REIT quickly burning liquidity Mezzanine lender Monarch takes stake in AECOM Capital, Combined's Pendry WeHo projectMezzanine lender Monarch takes stake in AECOM Capital, Combined's Pendry WeHo projectNvidia buys headquarters campus in Santa Clara for $374MNvidia buys headquarters campus in Santa Clara for $374MFoxtrot founder Mike LaVitola eyes brand revivalFoxtrot founder Mike LaVitola eyes brand revival
Commercial
National

Feared a retail killer, e-commerce is boosting brick-and-mortars

Expanded operations are a boon to physical locations

Instead of Killing Stores, E-Commerce is Reviving Them

(Photo Illustration by The Real Deal with Getty)

Online shopping was feared to be the death knell to retail real estate after physical locations shut their doors in the wake of the pandemic. 

But retailers are using their brick-and-mortar stores in novel ways to involve them in the e-commerce business, making them more essential to operations, the Wall Street Journal reported. Physical stores are proving their resilience, even as other commercial sectors struggle to navigate the post-pandemic world.

Last year, almost 42 percent of e-commerce orders involved the use of stores, up 15 percentage points from 2015, according to GlobalData. The stores serve a variety of purposes, giving customers an opportunity to explore items before they order online, taking in customer returns and serving as small fulfillment centers.

When stores become pickup and drop-off spots, it lowers the costs of many of the online shopping expenses, like labor, packaging and shipping. The integration of online shopping into stores isn’t without difficulties, though, as returns can muddy up sales numbers and in-store pickup can provide labor and space challenges, particularly for grocery stores.

Sign Up for the undefined Newsletter

Some of the top brands in retail have embraced e-commerce activities in their stores. Walmart fulfills more than half of its online orders in stores, while Target fulfills almost all of them that way.

Read more

Physical stores more relevant than ever: Retailers are on track to open more stores than they close for the third consecutive year, according to Coresight Research.

E-commerce has also continued to rise as a reliable option for shoppers, demonstrating a rising tide can lift all retail boats. Online sales accounted for 15.4 percent of all retail sales last year, according to the U.S. Department of Commerce, representing a gain from 14.7 percent in 2022.

— Holden Walter-Warner

Tags
E-commerceRetail Real Estate