Back to Brick and Mortar: An Evolution

Brick and mortar stores evolved with the advent of the internet, and now internet business models are moving into brick and mortar stores (like Amazon). Is this an evolution or a devolution? How do you see things developing in the future?

I would say that Internet business models moving into brick and mortar spaces is an evolution, as it is the next logical step in expansion, branding, creating awareness, building customer loyalty, and changing the retail experience for customers.

By definition, devolution is a “descent or degeneration into a lower or worse state.” I would disagree that one business model (the Internet business model), is better than the other (the traditional brick and mortar model)—they both have their strengths and weaknesses. Online companies are not tossing their Internet business models in favour of traditional business models because the Internet model was no longer working; rather they are finding new ways to utilize brick and mortar locations to their advantage.

The Internet business models, which revolutionized business and the retail experience, are also revolutionizing the brick and mortar experience. While there are examples of stores that started online and then opened a traditional brick and mortar location, this is not common. And as Walsh wrote in The Gaurdian, these are usually specialty stores or clothing stores (like Casper and Birchbark). But the companies that we really want to pay attention to during this transitional time are the large, leading companies (like Amazon, which the question references), and others, like some of the big banks, who are approaching the brick and mortar expansion with intense innovation. They are finding new, streamlined ways of doing business: they are evolving.

In the case of Amazon, I agree with the points raised in class that a brick and mortar location is not the end goal—it is a means to an end. The cashierless, camera-filled stores will help the Amazon dive even deeper into the data of how people shop while at the same time training people to expect a streamlined shopping process. By getting to know us intimately (and then using that knowledge to cater to our needs) and building up our dependence on them, Amazon is ensuring that our relationship is strong so that we buy everything from them (eventually online, because that is even more streamlined than going to a store). Take the example of when a CNBC tech correspondent accidentally shoplifted a yogurt from the Amazon store. She tweeted about it, and Amazon responded telling her to keep the yogurt. The customer is happy, and Amazon carried on unconcerned about shoplifters because 1) their technology is so advanced the scenario occurring regularly is highly unlikely, and 2) once people are converted online shoppers, shoplifting will become even more impossible than it already is in their stores. I foresee other grocery stores and retailers trying to emulate Amazon’s model, but if they don’t move quickly Amazon will continue to eat up their market share.

Pivoting, I’d also like to touch on another model of brick and mortar stores that have come out of online models: pop-up banking branches. As people increasingly do their banking online and some banks exist only online, there is less need for brick and mortar locations. But occasionally, a physical location is important for improving customer service and increasing visibility. Pop-up branches, which DiGiovanni writes in the linked article, are cost-efficient and affordable.

“But what if you could just drop a portable branch off in high-traffic, populated areas whenever needed? Imagine locals buzzing about your branch, and offering suggestions on where it should be located next? Or if you could put your branch where it was needed most after a natural disaster?”

Her article touches on how customers want convenience, and how this is a great way to be where your customers are rather than having them come to you. Other service providers should be watching the banks carefully to see how this new model unfolds as it has the potential to work in many other sectors as well (such as retail and food, which have experimented with similar models but not to this extent).

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