CBRE report: E-commerce not really ruining traditional retail

A popular myth holds that pure-play e-commerce is taking over traditional retailing. But a new report from CBRE outlines how the opposite may be true: Brick-and-mortar retailers account for roughly half of online sales and related activity. Pure-play refers to companies that operate only on the Internet.

The latest installment in CBRE’s “Beyond the Headlines” series outlines how, rather than being wiped out by e-commerce, many traditional retailers have evolved into omni-channel merchants operating both online and in stores. As a result, retailers born of bricks and mortar now collectively generate slightly more than half of U.S. online sales, according to CBRE’s analysis.

In addition, traditional retailers are expanding into more U.S. distribution space than their online-only rivals. CBRE calculates that traditional retailers accounted for 58 percent of new leases for retail supply chain space — meaning retail-specific warehouses and distribution centers — in 2015 and 2016. By comparison, pure-play e-commerce operators claimed 32 percent and wholesale-retail users 10 percent.

“Physical retail and online sales aren’t mutually exclusive,” said Melina Cordero, CBRE Americas head of retail research. “Modern, adaptive retailers have embraced e-commerce as one of several channels to best serve customers. And shoppers increasingly research products both online and in stores before making their purchases.”

The challenge for retailers, however, goes beyond recognizing the importance of omni-channel capability. Assembling a truly omni-channel network of precisely positioned stores and distribution centers is a necessary, but complicated, and often expensive endeavor.

“Consumers expect their experience with retailers to be seamless, whether they’re researching the product online and buying it in the store or vice versa,” said Brandon Famous, CBRE Americas retail leader and co-lead of CBRE’s Omni-channel real estate practice. “Retailers that make the investment to build and perfect truly omni-channel networks are ensuring the long-term viability of their brand in the changing marketplace,” he said.