Hudson’s Bay announced this week the acquisition of flash sale site, adding further support to the idea that online retailers – except Amazon – must build brick-and-mortar presence to scale. Hudson’s Bay revealed plans to integrate with Saks Off 5th stores through Gilt concept stores inside the retail locations. Execs also expect traffic to increase as consumers will be able to return items purchased on Gilt to stores.

L2’s 2015 Digital IQ Index: Department Stores finds online and in-store sales are no longer divided as retailers are looking to integrate them with online-to-offline services such as in-store pickup and inventory visibility. For example, Nordstrom and Sears have introduced and are scaling “in-vehicle pickup” and Macy’s allows users to check if an item they are considering for purchase in a nearby store. Omnichannel sophistication has increased; among brands tracked since 2013, real-time inventory present on product pages has jumped from 16% to 61%.

department-stores-physical-footprint-of-macys-vs-amazonThough many of these solutions are far from seamless, department stores with a large retail footprint have a head start in meeting shoppers’ omnichannel expectations since they have more brick-and-mortar touchpoints for consumers. And these touchpoints can be the difference between a business with losses or profits as they can help lower and recoup the cost of returns and exchanges. While net returns of online purchases result in a 23% loss of net sales, allowing in-store returns has proven to reduce the loss to 5% by encouraging substitutions, impulse purchases, and exchanges during the consumers’ visit. Allowing in-store pickup reverses that loss to a 7% gain in net sales, as additional consumer touchpoints (online and offline) generate sales.

Smart retailers with online origins – Birchbox, Warby Parker – are realizing the value of offline touchpoints and opening stores.


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