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Why Some Businesses Are Opting For Traditional Physical Stores March 31, 2022 (0 comments)

Physical stores

New York, NY--Digital businesses are known to cut out the hassle. Setting up a digital store is cheaper than a physical store, and the running costs are low too. However, an aspect of digital businesses often goes unnoticed — rising digital advertising costs.

Michael Brown, a partner in the consumer products and retail practice at consulting firm Kearney, tells New York Times that acquiring customers through social media ads has become "prohibitive" as growth has slowed and customer acquisition costs have risen.

The cost of acquiring a customer can range between $100 to $800, according to Daniel McCarthy, a professor at Emory University's Goizueta School of Business, as stated in the Times report. Besides, recent changes in the Apple operating system around data gathering have made it harder for advertising networks to target customers. 

Going back to physical stores might be the option at such a juncture. For others, making that move — or extension — from online to physical retail stores is also about the brick and mortar value they associate with their business.

"I felt a gravitational pull toward a more residential space," she said. "And it felt meaningful to make an investment in an area that needed a shot in the arm," Ms. Barboni Hallik, a former Morgan Stanley managing director, told the Times.

The brick and mortar values are high in jewelry stores, as products often require a personal inspection — something that's not as easily possible with digital shopping. Besides, omnichannel approaches to selling products have also motivated businesses to open physical stores.

Read more in the New York Times report.

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