The relationship between online traffic and physical locations is still being understood, but data suggests the relationship is not mutually exclusive, but rather mutually beneficial. A 2017 study found that for each dollar that is generated in online sales from reviews, another $4 to $6 is generated in sales at a brick-and-mortar counterpart. This reveals a significant motivator for online sales: information and transparency. Consumers will spend days, weeks or even months researching a product, and will often opt to purchase the item in-store. Web-based sales channels are not taking retail sales from brick-and-mortar locations; the information they provide online is driving new sales to the brick-and-mortar counterparts. Savvy retailers with a knack for creating an inviting destination for consumers can see a positive future for retail.
Its online web traffic essentially acts as a funnel to the physical location and translates into sales of over $3,000 per square foot, according to one analysis. That is higher than even Tiffany’s. Today’s retailers use the information they gather about their customers to make more informed real estate decisions.
Landlords are more open to on-line concepts, investors are slower to follow, and prefer national names on rent roll; smaller retailers sometimes outperform national competitors.
National concepts are notoriously difficult to work with, especially those with low margins. Some use their collective set of negative landlord experiences to push for tenant-friendly leases. Landlords have, in the past, given up key negotiating points because the increased value with a national tenant offset most negatives or financial loss. Online-only retailers opening their first locations do not have the experiences with landlords, economic downturns and so on to know what to push for, nor do they provide owners with the same increase in value to the property. On the other hand, this is a reason why many investors, tired of being pushed around by major tenants, are inviting new players to the table, and why we are seeing local tenants obtain locations that historically they would not have been presented with.
Consumers are spending their time researching online but walking into stores in search of an experience. The data collected from consumers online can be used to create exactly what shoppers are looking for and retailers must be prepared to meet that need.
This article does not create an attorney-client relationship. This article is for general education purposes only and is not legal advice. You should consult with a qualified attorney before you rely on this information.