Navigating the Blend of Brick-and-Mortar and Digital Frontiers

The retail sector has undergone rapid transformation spurred by the surge in online shopping and the adoption of new technologies like AI and data analytics. While traffic in fashion malls and physical stores has improved in the last couple of years, companies are encountering fewer in-store transactions and increased customer demand for streamlined experiences. However, brick-and-mortar stores can still thrive, especially when integrated with new technologies. 

According to the Mexican Online Sales Association (AMVO), 75% of shoppers prefer a combination of online and physical stores. “The integration of functionalities between both channels, such as locating physical stores from the website, being able to click and collect, making returns in physical stores, or being able to make online purchases either through kiosks or through a salesperson are important values in the consumer's omnichannel experience,” says AMVO. 

While customers want to visit both physical and online stores, their preference for one over the other varies widely depending on the sector. High-end, for example, remains largely traditional in certain aspects, says Marco Di Santo, Managing Director Mexico, Bvlgari. In this segment, online commerce represents a small portion due to customer distrust and their preference for physical experiences. 

“There is a customer journey, a transition between physical and digital that is considered outdated. People search online and then go to the physical store to analyze the product. Particularly with jewelry, an immediate purchase is not common; there is a deeper emotional connection that customers consider. From physical, it returns to virtual, where the seller sends options and photos, and the customer makes the virtual purchase then,” says Di Santo.

Companies are implementing digital solutions within physical stores, like augmented reality and virtual showrooms, to entice consumers to enter and buy in-store. This not only decreases the probability of product returns but also enriches the overall online shopping journey, closing the divide between the digital and physical retail realms. Companies like Caper Carts are implementing AI and retail media on shopping carts to automatically identify items placed in the basket, enabling customers to bag items while shopping and conveniently check out directly.

Technology support is essential and augmented reality plays a key role in helping to enhance the customer experience, says Cristian Campos, E-Commerce Manager, Samsonite, adding that companies must make the most of available data.

Omnichannel has become crucial to the modern shopping experience, but it is also necessary to ensure that any point of contact provides the same pleasant experience, explains Laura Torres Del Cueto, Managing Director Mexico & LatAm, Hugo Boss. “We are integrating technology into our strategies. For example, in fashion shows, customers can click and buy the garment. We have also implemented an internal chat for the company and introduced the "Boss House Valley" virtual experience with augmented reality to offer different friendly experiences beyond the purchase,” says Torres.

Another modality that has become popular is the virtual try-on, which also increases online engagement, says Di Santo . “At the same time, in the physical realm, we have invested in technology like Oculus to offer three-dimensional experiences to customers. Events have also been impactful; we have taken them to immersive environments to create memorable memories. The pandemic has driven us to create memorable experiences that foster customer loyalty,” says Di Santo.

To stay ahead, companies need to stay in constant communication with clients, explains Emiliano Segura, Co-Founder, clicOH. Data collection can be essential in enhancing communication, says Torres. “This allows us to personalize marketing strategies, avoid customer saturation, and generate engagement and loyalty. The integration of AI technology helps us understand customer purchasing habits and further personalize their experience,” she adds.

A robust CRM is also fundamental. “[CRM] helps us understand our customers and predict their purchasing needs. We are developing a customer acquisition module to further improve our communications and offer unique experiences that strengthen the brand relationship”, says Di Santo.

The number of online marketplaces keeps growing in Mexico, which experienced a 78% increase in sellers in 2023, according to a study by Retail Compass. The Mexico retail market size was MX$7.78 billion in 2022 and is expected to grow at a Compound Annual Growth Rate (CAGR) of over 6% during 2022-2027, according to Global Data. The growth is attributed to the integration of omnichannel solutions and other technologies to meet customer demands.