Intelligence firm L2, founded by Professor of Marketing at NYU Stern Scott Galloway, released a report last week called "Death of Pureplay Retail". Scott Galloway has in a well known presentation called The Four Horsemen already predicted that pureplay retail is going away. Whether its pure e-commerce or brick-and-mortar without an online presence.
He expects Amazon to get into physical retail sooner rather than later. Maybe through an acquisition of a gas station chain. They have already opened a bookstore and staffed pickup points.
The new report Death of Pureplay Retail continues this forecast and paints a gloomy future for online-only retailers.
- If you want to increase the traffic to your website, open stores. High-end malls continue to experience growth in sales per square foot, making them an attractive option for evolved retailers looking for brick-and-mortar spaces, said Scott Galloway, Founder of L2 and Professor of Marketing at NYU Stern.
The report finds that online retailers leveraging physical store locations drive higher organic site traffic and lower customer acquisition costs while elevating brand awareness.
Pureplay E-Commerce Unsustainable
Online retailers with stores are said to have the dual benefits of both profitable new points of distribution as well as increased consumer awareness and online site traffic.
- Online retailers are increasingly recognizing the advantage of opening stores in improving the underlying economics of their business and accelerating their growth, and we're seeing this trend reflected in our leasing activity, said Mikael Thygesen, CMO at Simon, an American real estate company.
Nearly two-thirds of digital consumers cited the ability to see, touch, and try merchandise as a factor for preferring in-store purchases, while over half appreciate the ability to get products immediately, and one-third turned to stores to be certain about the fit.
Pureplay e-retailers are said to be disadvantaged by the high cost of marketing and shipping, making their business model challenging and ultimately unsustainable in the long-term, according to the report.