The Internet is proving its ability to be a serious disrupter to the retail industry.
Chain stores such as Macy’s, the Gap, and Kohl’s missed Wall Street’s earnings expectations, reporting lower revenues and profits compared with a year ago, and forecast a reduced outlook for the remaining fiscal year. Meanwhile, ecommerce sites fared much better, particularly the everything store, Amazon, which announced a 28% revenue increase since the same quarter last year.
This is a lesson for every industry—mortgage lending included—in adapting to changing trends.
Some Brick-and-Mortar Stores Are Losing Ground to Ecommerce
It’s more convenient (and often cheaper) to order a product from an online distributor than to trek to a store, peruse several aisles,—and if you even find what you’re looking for- wait in a checkout line.
Brick-and-mortar stores even serve as unofficial showrooms for Amazon and other ecommerce companies, where shoppers touch or try a product on for size only to order it online at a lower price.
Mortgage lenders and servicers can be stuck in their old ways too, with blinders on, not willing to adapt to new technologies that will keep them competitive and TRID compliant.
How Do Physical Stores Grow Market Share?
Of course, the woes at Macy’s, the Gap, and Kohl’s aren’t indicative of all brick-and-mortar retailers.
The Home Depot and Lowe’s success has moved in lockstep with the bettering housing market. Amid rising house sales and appreciating values, people remain willing to invest in home improvement projects. And due to shipping constraints, it doesn’t hurt that Amazon has had a hard time eating revenue from the many bulky products known to be sold at these big-box stores.
Another stalwart in this lackluster retail environment is Walmart. The world’s largest retailer reported higher-than-anticipated revenue despite recent employee wage hikes. And with continued investments in its ecommerce division, Walmart is sure to intensify its war with Amazon.
While Macy’s, the Gap, and Kohl’s each have an online presence, this hasn’t been enough to counter the lag from their physical stores.
Web-Only Stores Don’t Seem to Be the Ultimate Answer, Either
Even though web retail is strong, solely having an ecommerce presence is not seen as ideal by most retailers. Instead, brick-and-mortar stores can serve as a synergistic supplement to their online existence.
Several companies that started with web-only fronts, such as Warby Parker, Fabletics and Birchbox have opened physical shops in order to improve brand awareness and promote customer-product interaction.
“Our stores offer customers an additional way to experience our brand,” said Neil Blumenthal, co-CEO of Warby Parker, a prescription eyeglasses vendor.
The Brick-and-Mortar and Web Stores Balancing Act
While department stores bear significant overhead costs that web retailers don’t, they also offer advantages unmet by their digital competition. The trick is figuring out the right balance between physical and cyber presences.
Contact ATS Secured today to learn how you can enhance your brick-and-mortar mortgage business with technology that will exceed the expectations of your customers, partners and industry regulators.