Physical stores under omnichannel pressure: roles, constraints and implications of retail real estate
Aino Ruohola, Kaisa Jaalama, Saija ToivonenPurpose
The COVID-19 pandemic has accelerated the shift towards omnichannel retailing. This is evident in the evolving role of the physical store, moving beyond its traditional function as a point of sale. Omnichannel retailing has led to new roles for physical stores but also to store closures. This study advances the understanding of the future of physical stores.
Design/methodology/approach
First, our literature review transfers knowledge about the roles of the physical store in omnichannel retailing from retail research for the real estate community. It revealed a novel role, termed phygital (physical and digital), which holds relevance within real estate. Then, we conducted semi-structured interviews with 21 retail industry professionals representing 20 brands across eight sectors.
Findings
We identify four roles of the physical store: phygital, traditional, flexible and hybrid. A phygital store emerges as retailers aim to offer a seamless customer experience regardless of the sales channels used. However, the viability of phygital stores hinges on traditional performance metrics, with in-store sales crucial for sustaining physical stores.
Practical implications
The hybrid role increases the shift in the allocation of floor space from retail to storage purposes, while phygital stores combine multiple features. To aid the emergence of phygital stores, a collaborative approach should be implemented through landlord-retailer partnerships.
Originality/value
We introduce a novel dimension to the literature, derived from practice, showing that, alongside retailers, a landlord in Finland has adopted omnichannel strategies. Retail property owners can ensure their post-pandemic success by establishing a landlord-led e-commerce platform, extending their reach beyond retail properties.