During the most disruptive peak of the COVID-19 crisis, many within the retail and real estate sectors wondered about whether its impacts on the already impressive scaling of e-commerce activity would mean a death knell for brick-and-mortar stores. But roughly two and a half years in, a new report from Cushman & Wakefield suggests that, on the contrary, physical storefronts have weathered the storm and have reestablished that they’re a vital part of the retail ecosystem.
E-commerce sales, Cushman & Wakefield reported, are leveling off at about 21% of core retail sales (excluding gas, motor vehicles and dining). That’s down from almost 23% in 2020, at the height of pandemic-induced lockdowns and restrictions.
At the same time, retailers are opening more physical locations now that consumers are mostly back out and about. More than 4,200 stores have opened in the first five months of this year, eclipsing store closings during the same timeframe by 240%. Thus far, 2022 is set to be the first year of net-positive store openings since 2016, per data cited by Cushman Wakefield from Coresight Research.
That’s after a 2021 in which new retail business openings bounded 50% over their average growth rate from 2016 to 2020. And while a good deal of that growth was driven by the 45% rise in e-commerce over the past two years, Cushman & Wakefield has reported that a growing number of those digital-only brands are trimming the “only” from that status to open more and more physical stores. Eyeglasses retailer Warby Parker, for example, began digitally native, but opened its first store in 2013, added 35 in 2021 and is looking to open another 40 this year.
“Physical stores ensure an immersive customer experience, reduce customer acquisition costs and help build a longer lasting relationship,” wrote Barrie Scardina, executive managing director and head of retail services, Americas, for Cushman & Wakefield on the company’s website. “Brands like Warby Parker, Allbirds, Untuckit and Brilliant Earth are great examples of brands that exponentially grew their business by expanding from online to in-store.”
Retail storefronts are here to stay, with Cushman & Wakefield research forecasting that more than 80% of all retail sales will still be made in physical locations in the coming years.
“Stores can create their own hub-and-spoke supply chain to meet community demands, be used as a local fulfillment center for e-commerce orders, allow customers to buy online and pick up in store, and ensure returns are simple and inexpensive,” Scardina said. “Stores also provide consumers with a place to speak to someone, ensuring problems can be solved, questions can be answered, and the brand experience is protected by an ambassador.”
