Ever since Amazon began selling books online in 1995, retailers — and plenty of other commentators — have been asking what role, if any, physical stores might play in the retail arena. Some have gone so far as to predict the ultimate demise of stores, and others expound the virtues of various hybrid omnichannel solutions. This report explores where things stand in retail in 2017.

Key findings

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Although overall retail sales performance is quite strong, during the last several years essentially all of the inflation-adjusted gains in retailer revenue have been driven by online channels, which enjoy growth rates as much as 7 percent higher than retail sector growth as a whole.

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Omnichannel strategies — which seamlessly synchronize many forms of customer experience, including brick-and-mortar store environments, online sales, smartphone connectivity, and voice connections — have been a success for a few retailers. Generally speaking, though, these efforts have not succeeded in arresting declines in store activity, improving retailer profitability, or boosting online sales.

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A showroom, in its purest form, is a store that showcases products, but sells nothing. Showrooms work best for differentiated goods. These are products that vary significantly from one retailer to the next.

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