A Corona Xmas: Why physical stores will power online shopping this holiday season

Most shoppers are more likely to make an e-commerce purchase if they can return the item in a local store

A burning question this holiday season is whether people will return to physical stores or buy substantially everything online? The Mary Meeker formulation is: what percentage of retail spending will move online? But that binary “brick and mortar vs. e-commerce” narrative is crude and fails to appreciate the role stores play in driving online sales.

Indeed, a more interesting question is to what degree traditional retailers will be able to leverage physical stores for competitive advantage in their battle with Amazon and other pure play e-tailers? In the past, retailers with stores and e-commerce have treated them as entirely distinct channels, with different P&Ls and separate operational teams. Only recently have major retailers recognized how stores and e-commerce support one another and started to integrate those efforts (e.g., curbside pickup and seeing physical stores as ready-built distribution centers).

The dominant working assumption is that almost all holiday shopping will happen online and that stores will play a limited or secondary role. That would flip the script in terms of dollar volume compared with past years. Yet, even if the majority of buying happens online, the presence of local stores will factor significantly into consumer decision-making.