The Fitzgerald Test for Retailers

Physical retail is not dead, but the entire retail industry—from consumer behavior to physical footprints—is in the midst of a great transformation. The future of shopping isn’t digital versus online; it’s both, and retailers that know how to make their bricks click are thriving.

There is a multitude of retailers who understand how important it is to play to the strength of their physical assets in the interest of connecting better with their customers. Not only do consumers have more access to more channels, but retailers have more points of access to engage their customer.

Sephora was ahead of the curve with its “flash boutique.” This was the first retailer to bridge the mobile-to-local retail gap by providing in-store tablets, charging stations for mobile phones and a selfie mirror. While offering a wide variety of luxury cosmetics, the beauty retailer also added digital catalogs and discovery tablets to help Sephora’s in-store shoppers discover and experiment with products. By focusing its platforms and content to give multichannel shoppers a seamless experience, Sephora was a pioneer in connected retail.

Brick-and-mortar remains at the heart of the customer relationship, but retailers need to leverage online platforms if they want to maximize their offline sales. The ability of online channels and social media to drive in-store sales is incredible. For several years, brands like Starbucks have been refining the use of location-based targeting technologies, sending notifications to mobile phones to drive store traffic.

The nexus of technology and retail is transforming the industry as we know it.

Another area where retailers fail the Fitzgerald test is when it comes to malls.

The Great American Mall still holds its rightful place in this new retail industry, and in most shoppers’ hearts. It simply needs a facelift. From Westfield hiring an entertainment consultant, to Brookfield (BN) developing an arts and culture program, the reimagined mall has turned into a type of thriving entertainment and community hub, drawing families, millennials and Gen Z alike. In fact, according to Biz Women, more than 60 million millennial shoppers say they have gone to the mall in the last three months, and 60 percent of Gen Z shoppers said they actually prefer shopping at the mall, per Business Insider.

The savvy mall owners have gotten the message. They are transforming, remerchandising and repositioning properties to house movie theaters, restaurants, health clubs and even grocery stores, hospitals and universities. AMC Entertainment is rolling out a plan to expand to shopping malls throughout the United States with its new virtual-reality theme parks.

The final area of myopia is in resting all of retail’s woes at the foot of e-commerce.

Yes, some retailers have been driven out of business by e-commerce, but leveraging a retailer’s physical assets has never been more important.

Physical presence is a form of marketing. It is a place to look at a product and experience it in a way that one will simply never be able to do online.

However, the brick-and-mortar shops that thrive are getting smarter and more strategic. A decade ago, an international luxury fashion retailer looking to make its mark in the United States would consider opening 100 stores in malls and in high-end retail corridors. Today, they may consider opening 15 stores in highly targeted markets outside of malls to use social media to drive online sales.

Of course, the perceived villain in all this (as far as retailers are concerned) is Amazon (AMZN). It sits at the center of the digital shopping transformation.

But there’s something worth noting: Amazon has been actively looking for opportunities to reach customers in a physical setting. Amazon’s new bookstores and its acquisition of Whole Foods underscore how the intersection of brick-and-mortar retail and e-commerce is the wave of the future.

Hopefully consumers can continue to keep two contradictory ideas in their heads and still function as they continue to support the melding of online and physical retail.

Robert K. Futterman is the chairman and CEO of RKF.