DEATH OF PUREPLAY RETAIL

INTELLIGENCE REPORT DEATH OF PUREPLAY RETAIL LAST MILE

Unlocking Omnichannel Potential Evolved retailers have been slow to implement omnichannel investments, including in-store pick-up, in-store returns, and real-time in-store inventory—even as these tactics become increasingly commonplace among traditional U.S. retailers. 29 percent of index brands tracked in L2’s Intelligence Report: Omnichannel Retail 2015 offer the ability to pick up inventory in-store. Additionally, 75 percent of Index brands allow customers to return online purchases in-store, and 48 percent of index brands offer real-time in- store inventory on product pages. As evolved pureplay brands catch up to this degree of sophistication, they stand to benefit financially. While pureplay e-tailer orders typically net 77 cents on the dollar (due to costly returns that average 23 percent of order value), retailers that offer both in-store pick-up and returns enjoy an accretive effect—whereby shoppers walk out of the store with 107 percent of their original basket size
after exchanging merchandise and making incremental purchases (behaviors rarely seen in a digital world). 13

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1. Sears and Kmart promise curbside delivery in 5 minutes or less, and track delivery times via an in-app stopwatch. Consumers receive coupons for longer waits.

2. Consumers call or text when approaching one of 20 Nordstrom pilot stores offering curbside pickup, launched in May 2015.

Death of Pureplay Retail: Net Sales Given Omnichannel Capabilities

Initial Purchase Value

Return/ Exchange Loss

Pick-Up Recoup

Returns Recoup

Net Sales

Pureplay E-Commerce

100%

-23%

N/A

N/A

77%

Buy Online, Return In-Store

100%

-23%

+18%

95%

N/A

Buy Online, Pickup + Return In-Store

100%

-23%

+12%

+18%

107%

13. “ Shopping Centers: America’s First and Foremost Marketplace ,” ICSC, October 2014.

Source: L2 Inc., “Omnichannel Retail 2015,” July 2015.

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January 12, 2016