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58% of Retail Execs Say Brick-and-Mortar Will be Obsolete

With the economy strengthening, many retailers are positive about the business outlook for the coming year, and most of that optimism centers around web sales.

Seventy-one percent of retailers surveyed for a CIT Group study conducted by Harris Poll said they expect e-commerce revenue to increase, and 30 percent said online sales would grow faster than any other channel.

The retail sector has seen dramatic shifts in recent years as technology takes over, fashion gets faster and in-store shopping wanes in favor of web-based commerce.

Most retailers can narrow those shifts down to four emerging trends: One-stop shops like Target and Walmart will continue to dominate, the traditional American mall will become a thing of the past, Pop-up shops will emerge as an appealing alternative, and fast fashion retailers will continue to build their competitive presence.

Sixty-one percent of retailers said sell-all retailers will become the stores of the future as consumers increasingly seek convenience, 45 percent of retailers think the mall’s demise is inevitable and 51 percent think fast fashion is still stealing the show and luring consumers away from mid-market retailers.

Companies without a web presence can’t survive in today’s connected economy, and for most retailers, web revenue is keeping pace with revenue from other channels. Brands with brick-and-mortar focused businesses are even giving more due to their online presence than they were a year ago as they now recognize the need, and many are using physical stores to create more unique experiences consumers can’t get online.

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The retailers surveyed said e-tail has continued to adversely impact brick-and-mortar stores and it’s forcing them to rethink and reposition their identity, the report noted.

Fifty-eight percent of retailers said brick-and-mortar only stores won’t survive in the future.

According to a Nielsen U.S. Shopping Insights study published in July, competitive pressures from online and big box stores have had a “major” impact on store closings within some specialty formats in the past several years, which has only further fueled the importance of an online presence.

To capitalize on that mobile market, 52 percent of retailers have increased email campaigns, 45 percent updated their websites to meet consumer needs and 43 percent are creating mobile applications.

Social media also represents a critical step forward in commanding the online market.

One CMO surveyed said, “Social media is important to our overall business strategy as it helps increase consumer engagement. It also allows us to speak with these people in a manner in which they are comfortable. I think social media will only become more important in the future.”

When it comes to supply chains, most retailers cite logistics as a challenge. One in two retailers expressed anxiety about the viability of their supply chains, so to prepare for the inevitable, though unexpected changes, 61 percent of retailers have expanded their supplier partnerships, 57 percent increased their use of technology for logistics planning and 54 percent are building inventory early.

Despite the challenges, however, retailers’ are feeling festive about upcoming holiday season sales. Nearly all of those surveyed expect sales to increase over last season, and 60 percent think that increase will reach 6 percent or beyond.

“Online shopping continues to provide the opportunity for the biggest incremental bump, by far, to holiday sales, more so even than the price of fuel, mobile purchase, technology enhancements or broad discounts,” the report noted. “So it is not surprising that over the holiday season, retailers are planning to increase their staff specifically devoted to Internet and mobile sales channels.”

Sixty-two percent of retailers, in fact, said they will increase staff dedicated to web and mobile sales.