Latest Marketing Trends in Brick and Mortar Stores

According to the US Census Bureau’s latest Annual Retail Trade Report released on May 7, 2016, e-commerce sales accounted for 6.44% of the total US retail sales in 2014, up from 4.46% in 2010. Thus, retail sales in brick and mortar stores continue to overwhelmingly dominate the market, despite all the hype regarding online sales. Brick and mortar stores have traditionally used the power of newspaper and TV ads, as well as the attractiveness of the display of their goods, to attract customers. However, even brick and mortar stores have had to tap the power of the internet for the purposes of reaching out to their customers, given the amount of time individuals spend on the internet, either via their phones, tablets and laptops or desktop computers.

A.T. Kearney’s report, “On Solid Ground: Brick and Mortar is the Foundation of Omnichannel Retailing,” has some interesting insights on customer preferences for brick and mortar vs online stores. The report is based on a study of online vs physical store preference over the various stages of purchasing a product. The study found that consumers prefer the online mode only for the discovery part of the process of shopping, and that too only for certain categories, such as computers and electronics. When it comes to product trial, the next stop in the shopping process, respondent preference for in-store trial is as high as 85% for categories such as apparel, accessories, health and beauty products, and furniture, where touching the product or trying it on are vital to product selection. Customers also prefer the physical store over the online when they want to purchase the product that they have chosen. For product returns, even when the product has been bought online, customers prefer to go to the physical store rather than return the product by mail.

According to Gartner’s “CMO Spend Survey 2015-16”, marketing budgets grew nearly 10% over 2015, and now account for 11% of company revenues. An article on vtldesign.com goes deeper into the spread of marketing budgets across companies of different sizes. It reports that, as per a 2014 CMO survey, companies with less than US$25 million in revenue spent an average of 11% on marketing, while companies with US$25-99 million in revenue spent an average of 9% on marketing. The survey also broke down the average marketing investment as a percentage of revenue by the type of business. Thus, while B2B product businesses spent 10.6% of their revenues on marketing, B2C product businesses spent 16.3% of their revenues on marketing.

Brick and mortar stores have to attract customers to come and shop at their shop. How do they do this? By offering a variety of products at competitive prices. By making the store’s display attractive, and the store’s environment conducive to shopping. By advertising on TV and on the internet through various platforms. According to the AT Kearney report mentioned above, the percentage of capex spent on store-related investments by a selection of the top retailers in the US grew from 68% in 2011 to 76% in 2013. Clearly, store design and product display are a key factor in the success of retail brick and mortar stores. Experts at Metaline Products say that they have resorted to providing a full complement of services, including design, production and warehousing and distribution of the custom in-store displays that they create, as well as an assortment of design and marketing services.

According to an article on emarketer.com, total digital ad spending is expected to surpass spending on TV ads in 2017. In 2017, total spending on TV ads will be US$72.01 billion, or 35.8% of total media ad spending in the US, while total digital ad spending will be US$77.37 billion, or 38.4% of the total media ad spending. This will be a significant jump from the 35.8% of total ad spending that will be spent on digital ads on 2016. Digital ad spending as a proportion of total media ad spending in the US has grown by ten percentage points from 2014 to 2017. After all, people are spending more and more time online; according to an article on qz.com, the internet accounted for 13% of the average time spent daily on some form of media in 2010, but is set to reach nearly 30% in 2017.