Synergistic Relationship between Bricks and Clicks
I am excited to share with you a new ICSC study, aptly named “The Halo Effect,” that demonstrates how much physical retail stores contribute to not only a retailer’s web traffic but also the primary measures of the retailer’s brand health.
Instead of a battle between “bricks and clicks,” the study (which looked at more than 800 individual retail stores covering 145 U.S. markets) this study shows a much more interdependent relationship, a synergy between physical locations and the website traffic each brand drives:
When a retailer opens one new physical store in a market, overall web traffic increases an average of 37 percent compared with web traffic prior to the store’s opening.
For emerging brands (less than 10 years old), new store openings drive an average of 45 percent increase in web traffic following a store opening. (For comparison, established retailers experience an average 36 percent boost in web traffic.)
A retailer with 20 locations in a single market can double its share of web traffic after opening one additional physical store.
Conversely, when physical stores are closed, web traffic in that market drops from 10-50%, depending on the number of stores closed versus total number of locations.
Retailers have talked a lot in recent years about the “omnichannel” consumer, the idea that shoppers now want to be able to access brands online and offline seamlessly. This study begins to shed light on the nuances of how consumers enjoy online convenience, but also place a high value on the ability to visit and interact with a brand in person.
This study, the largest of its kind to date, begins to quantify how physical retail locations drive digital engagement. A major implication is that retailers need to consider not just individual store performance, but the “halo” effect each location provides as they manage their overall configuration of physical retail stores. The study also examined consumer brand perception of 21 retailers in 10 metropolitan markets and compared those results with a national benchmark. A similar synergy emerged from the data. A boost in brand awareness and willingness to consider purchasing from a brand accompanied the presence of physical locations. The impact was more subtle among established brands, but it jumped 18 percent for emerging brands. That is, the presence of a physical store made consumers much more likely to think positively about that brand.
The study quantifies the value of physical stores as a constant billboard, reinforcing the brand, providing opportunities to engage and try the product, and placing a face on the brand. The results paint a nuanced consumer equation that brands must navigate to succeed, and we see it playing out today. A number of online retailers are acquiring or opening physical locations to build their brand and offer direct interaction with customers. Traditional stores continue to expand their online and delivery capabilities to give consumers multiple ways to shop.
For more details and to access the full report, visit the ICSC website. And to learn more about Broad Reach Retail Partners and the services we offer, please visit our website or contact one of our experienced staff members for more information. We look forward to hearing from you!
Founding Partner, CEO