The evolution of e-commerce since its inception in the 1990s has virtually taken over a considerable portion of all retail sales activities throughout the world.
The fascinating advancement of e-commerce was marked by technological progress, changing consumer behaviour, and new business trends around the world, including Sri Lanka.
The online retail trend began to change with the increase of internet penetration. Subsequently, traditional brick-and-mortar retailers also started establishing an online presence, enabling consumers to shop for a wide range of products from the comfort of their homes. The spread of mobile technologies made an enormous impact on online retail even at the beginning with several popular mobile apps coming into play that further influenced retail customers.
This gave a push and shove to the era of mobile commerce, or m-commerce, where mobile devices became primary shopping channels for many consumers. Retailers adapted by optimising their websites and developing dedicated mobile apps to provide all-in-one shopping experiences across devices.
e-commerce has deeply transformed consumer behaviour, offering incomparable conveniences, greater selection of choices, and enormously easy accessibility. It has expanded consumer choice by breaking geographical barriers. In Sri Lanka, online retailing has expanded consumer convenience where they were given the opportunity of purchasing products that were not available in the local retail market.
Significant shift
The convenience of shopping anytime, anywhere, and with a wide choice has created a significant shift towards online shopping. With a few moves on the mobile phone or the computer, consumers could compare prices, read reviews to obtain positive or negative feedback, and more importantly, make purchases from their homes. This consumer swing has particularly impacted routine purchases and commodity goods, where consumers prioritise convenience.
The shift in buyer behaviour toward online shopping has posed a massive burden for retail groups. Today, an increasing number of customers prefer the convenience of shopping from their homes, evaluating costs online, and having merchandise brought to their doorstep. Today, the traditional retail store faces demanding situations as more customers prefer buying goods through online platforms.
The emergence of e-commerce has presented considerable operational challenges for traditional retailers. Traditional retailers confront stiff competition from e-commerce systems and container stores as they offer a wide variety of products and aggressive pricing that attracts customers away from conventional retailers.
Customers tend to pick out the benefits of online shopping. They face intense competition from online retailers, who often have lower operating costs where can offer competitive pricing. These pricing challenges put pressure on retail stores.
e-commerce has also heightened consumer expectations regarding convenience, speed, and personalised experiences. Therefore, traditional retailers are compelled to adapt to digital platforms and invest in technologies and strategies to enhance the in-store shopping experience. They may be forced to implement mobile payment systems, offering online ordering methods, and introduce digital marketing tactics.
As consumers increasingly turn to online shopping for convenience and accessibility, brick-and-mortar retailers experience a decline in foot traffic to their physical stores. This reduction in foot traffic directly impacts sales and revenue for traditional retailers, leading to struggles to maintain profitability and sustain operations. With fewer customers visiting their stores, brick-and-mortar retailers face challenges in generating sales and fostering customer engagement.
Convenience
Electronics, textiles, and personal care products are the most frequently purchased products that switched to the online market in Sri Lanka. With 12.3 million internet users, approximately 7.5 million social media users, and 56.3% internet penetration reflects the popularity of the current trend. Therefore, due to the convenience offered by e-commerce, it is not surprising that more consumers are shifting to online buying.
Due to the pressure from e-commerce, a number of successful local retail businesses were forced to either downsize or wind-up their businesses. These closures not only result in job losses but also leave vacant storefronts, contributing to the decline of traditional shopping conveniences.
The impact on the employment aspect is substantial in the Sri Lankan retail trade. If the retailers downsize or close, it not only can aggravate the national unemployment issue but also have a substantial effect on the national economy and society. Labour statistics reveal that the growth of e-commerce has a significant influence on the declining trend.
When consumers change their purchasing habits and go online, the need for in-store staff requirements lessens, leading to job losses for sales staff and other retail positions. This shift has already forced many workers to seek alternative employment or switch to other professions. However, considering the current economic situation of the country, finding new employment, or moving to other professions is a daunting task.
To confront and mitigate the pressure of rising e-commerce, physical retailers must adopt proactive tactics to survive and also to use digital technology to prosper. While the challenges posed by online competition can be formidable, traditional retailers have unique strengths and opportunities that they can leverage to remain competitive.
Combatting e-commerce
Embracing as many channels as possible to combat the e-commerce burden is an effective strategy for brick-and-mortar retailers. To create a better visibility, retailers must utilise various sales channels, including online platforms, mobile apps, and social media for their awareness efforts.
They also must adapt to online selling to provide an all-in-one shopping experience across the available clientele. This approach will permit customers to engage with the product in whichever way is most convenient for them, whether it’s looking for products in-store or making purchases online.
They also can differentiate themselves from online competitors by enhancing the in-store experience for customers. More attractive store designs and layouts to create a pleasant ambience inside the store can encourage physical exploration. Retailers can also offer personalised services, such as in-store consultations, product demonstrations, and experiential events, to provide added value and raise customer loyalty.
Introducing technology to brick-and-mortar can be a powerful tool for retailers to enhance operational efficiency and improve the customer experience. Retailers can leverage technologies such as mobile payment systems, self-checkout practices, and inventory management systems to streamline processes and reduce wait times.
Staff training
Offering an exceptional customer experience from the entrance to the check out point can be a key differentiator when confronting e-commerce challenges. Hence, retailers must provide compulsory and persistent training to the staff, not only for the sales floor but also the back-office workers, to extend maximum support to incoming foot traffic.
By providing a high level of service, retailers can build strong relationships with customers, increase customer satisfaction, and foster loyalty that can drive repeat business and word-of-mouth referrals.
Brick-and-mortar retailers can capitalise on their physical presence within local communities to build strong relationships with customers and establish themselves as a trusted neighbourhood store. They can actively engage with the local community through events, sponsorships, and partnerships whenever possible to foster a sense of community and belonging. This way they can enhance customer loyalty to differentiate themselves from online competitors.
The negative impact of e-commerce on brick-and-mortar retail is deep and complicated. From forceful competition and declining foot traffic, traditional retailers face numerous obstacles in adapting to the changing retail landscape. However, even with such obstacles from e-commerce, brick-and-mortar retailers can turn the prevailing challenges into numerous opportunities to adapt and flourish in a digitally driven retail environment.
