4 Whitepaper: The Indoor Climate Solution of tomorrow for the Retail Sector Disruption in the Retail Sector 1 Source: U.S. Department of Commerce, 2020. Quarterly Retail E-Commerce Sales 3rd Quarter 2020. Washington: U.S. Department of Commerce. 2 Source: Deloitte, 2020. 2020 retail industry outlook, Convenience as a promise. Deloitte. 3 Source: McKinsey & Company, 2019. Perspectives on retail and consumer goods. p.7. 4 Source: Forrester, 2017. Forrester Data: Digital influenced retail sales forecast. Forrester Research. Forrester. 5 Source: Lutz, R., 2018. 3 ways to keep the personal touch in brick-and-mortar retail. [Blog] Commentary, Available at: [Accessed 3 February 2021]. 6 Source: McKinsey & Company, 2018. Who’s shopping where? The power of geospatial analytics in omnichannel retail. p.2. 7 Source: Rigby, Darrell K., 2011. The Future of Shopping, Available at: https://hbr.org/2011/12/the-future-of-shopping [Accessed 3 February 2021]. In the age of digitalisation and online transactions, some might fear that the time of the retail store is over. However, brick and mortar accounted for nearly 90 percent of all retail sales in the third quarter of 2019, according to the US Census Bureau (U.S. Department of Commerce, 2020).1 Statistics show that in 2019, digital natives turned to physical store pilots, and traditional retailers rolled out digitally powered physical stores (Deloitte, 2020).2 In this era of digital disruption, retail is in the midst of a disruption like no other, and every retailer must consider ways to redefine their strategy and operating model to get ahead of the curve (McKinsey & Company, 2019).3 Forrester Research estimates that by 2022, e-commerce will account for 17 percent of total retail sales, while an additional 41 percentz will be digitally influenced offline sales (Forrester, 2017).4 Retailers need a start-over mentality to determine how they will evolve throughout the entire brand experience (Lutz, 2018).5 Ongoing research shows that physical stores boost online purchases, and it is estimated that in-store sales will still make up 75 to 85 percent of retail sales by 2025. However, the physical store today has undeniably Research shows that physical stores boost online purchases and in-store sales will make up 75 to 85 percent of retail sales by 2025.6 evolved beyond being a place to buy products. A store now plays several possible roles, including serving as an experiential showroom for products (McKinsey & Company, 2018).6 A common mantra cited in the circles is, “Retail is detail”. Customers want the best of both worlds. They want the advantages that online shopping offers, in the form of broad selection, rich product information, customer reviews and tips, alongside the unparalleled experience of shopping in-store, with the advantages of personal service, the ability to touch and see products before buying (Rigby, 2011).7 Innovations are thus needed to bring the perks of both the experiences together and generate profitable growth. Retail Sale Projections Total estimated offline sales by 2025 Total estimated sales 2020
