In-store retail sales beat out online sales in May according to data from MasterCard signaling a shift from pandemic-era practices. Melissa Gonzalez, principal at MG2, an architecture firm, and the founder of The Lionesque Group, a retail strategy studio at MG2, joined Cheddar News to break down what's going on with the retail world. "You have that pent-up demand and desire to be in-person, to have that tactile experience, to be part of community events, so you are seeing it come back," she said.

Opening Bell

Why In-Store Retail Sales Overtook Online Shopping in May

and here to tell us why this is all happening melissa Gonzalez, principal at M. G. Two and founder of the Lioness Group. Good to have you on the show this friday. Can you break down the retail trends that you're seeing right now? Are people shopping african mortar in person more than their shopping online. You're definitely seeing a correction happening right? We had an extreme shift to online because that was the only way in which we could shop as consumers. We got really adept at doing that. Um but you have that pent up demand and desire to be in person to have that tactile experience to be part of community events. So you are seeing it come back. There's also products of consideration where that in person experience is necessary. We still have a bit to go and mastering fit online. So you're you're seeing a correction happen really. E commerce isn't going to go away but it did skew to an extreme direction just because those were only options. Yeah. And it's funny because I feel like we had an interview and I was talking about the nostalgia of mall culture and it's actually starting to come back a bit, I think people are out and about and trying to shop in person, get that experiential that we always talk about. But my question for you is if you think that e commerce maybe adapted a little bit too soon or grew too quickly to scale to the pandemic, like we've seen across the board for a lot of pandemic darlings, I think businesses that have had trouble reading this landscape, what are your takeaways from how they've adapted and how they can potentially adapt now that things are changing. You know, the successful ones are going to be the ones to understand that as consumers, we're just at the end of the day we became more fluid in the way in which we interact across channels and platforms with brands. So there's not gonna be just 11 cookie cutter answer. We gotta lean into commerce. So we have to leave into stores, we need to lean into great customer experiences and understanding how we meet them at the moment of intention or interest and get them what they need. So for the in store environment, it's those brands and retailers who have invested in things like flexible fulfillment. But thinking beyond this is just a transactional moment. How do we also make this a brand moment? How do we recognize that this becomes a driver of in store traffic, right. It's about having the fluidity and the convenience given to the customer because if you think about the utility tech, the service from them, it's really convenient. Right? And so we have that convenience factor added with tech but they still want great brand experiences. So it's about marrying the two. You've also seen a lot of brands evolve over the past years thinking about their physical retail footprint and what is the flagship destination? What is the service hub? So it's also thinking differently about what that portfolio looks like and understanding again, how is it best serving the consumer because at the end of the day we sell products, retailers and brands sell products, but they have to be in service of the consumer regardless how they're interacting with them. Yeah. And speaking of being in service with consumers, we know a lot of these e commerce brands reigned supreme during the pandemic. I mentioned that term pandemic darling, I think of companies like amazon huge Carbonneau and also stitch fix, where are they sitting now? What's the status and what are you seeing unfold? Yeah. So they're having different uh some similar challenges, some different challenges. So if we start with an amazon, yes, there's a lot of news out there about them having a trim down their warehouse footprint and whether it's 10, you know, 10 million, 30 million uh square feet. But what um, what again is happening is we had to ramp up to meet unprecedented demand right for delivery and then have to re normalize where that's going to be at. Think the interesting side is on the amazon as we're talking about brick and mortar is they've done some tests. Um four star open and close, they're expanding amazon go, had some challenges with whole foods now they're opening new stores for fashion. So I think they're still finding their footing to of what physical retail is gonna mean, but also validate that they continue to recognize its importance in the customer journey and building that customer relationship with fast food delivery. Again, I think that was accelerated from pandemic. People were nervous to go outside, it felt safer that way, but again, you're seeing a return to wanting to go in person. Um and then on the, on the real estate side there's a lot of conversations around do these dark stores have the curb appeal that they should, is this what landlords want? They're taking a closer look about how their zoning. Um those segments where those stores have been popping up, so whether or not they'll be able to get past some of those new zoning restrictions there and then went stitch fit, You know, they're having challenges with supply chain issues and and inflation and those costs, which is very real for for brands and retailers that rely so heavily on delivery, you know, those costs are going up and it's impacting the bottom line. How much of this phenomenon do you think has to do with inflation? Are you thinking that one of the major contributing factors is the fact that people have just been cooped up during the pandemic, so they want to get back out to brick and mortar? Or does some of this have to do with going in person to see items and kind of Finding the bargain comparing deals from one brand or one store to the next. Yeah, I think it's a little bit of both. There is some fatigue of just staring at a screen and that's the only way you can purchase something and then I think it's category specific. You know depending what you're looking to solve for. Sometimes you just really can't feel the confidence to do that online. You might want to not want to have to deal with having to deal with returns, getting your package, re re shipping that out going to ups or wherever you need to go for that drop off. So I think it's a combination, there is definitely pent up demand. You saw that kind of out of the gate, you're seeing a little bit of shift happening. Um When you talk about inflation, it's not impacting everybody the same way, right? So those in the lower income bracket, the increase in cost of gas has a much significant impact than those who are in the higher income brackets. So those are staying a bit stronger. Um So it's it's not one answer fits all, but inflation is definitely a challenge. Um And then people are reprioritizing how they're spending money as well. So not every category that was seeing the strength that they were seeing through the pandemic is the same categories of seeing it today. Melissa Gonzalez Principal at M. G. Two and founder of the Lioness Group. Always good to have you on the show and get that insight