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THE HALO EFFECT III
Where the Halo Shines: How Physical Stores Drive Online Sales
In 2018, The Halo Effect: How Bricks Impact Clicks quantified, for the first time ever, the value of physical stores by measuring retailer web traffic and brand awareness. ICSC’s latest report analyzed nearly $850B in spend data, 69 retailers and over 2,100 stores, and once again, proves the power of physical retail. Opening a store boosts online sales, while closing one decreases them.
There’s a powerful correlation between the arrival of a physical store and online sales. Opening a brick-and-mortar location is a reliable indicator that shoppers will increase their online purchases, in addition to their shopping in the new store.
+6.9%
All Retailers
(Established and Emerging)
Established Retailers
Emerging Retailers
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Download the full report to find out more about the halo effect and how you can use ICSC MARKETPLACES IQ, our new prop tech tool to conduct trade area analyses and uncover demographic and psychographic information to help you find the best business for a location or the best location for a business.
Online sales isn’t the only area to see a boost. Average basket size also grows when retailers open a new location.
In retail, sales are the great elixir that enable brands to grow, open new locations in new markets and continue to build their following.
Scott Mushkin, Founder and CEO, R5 Capital
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I'm 5’2”, so a lot of clothes that are mass produced don't fit me. That’s why I prefer going in person to shop and build trust with a brand. I know people at the stores that I frequent. There are workers that know me by name. It’s a consumer relationship that you can’t get from behind a screen. If I need a lip gloss that’s running out, that won’t stop me from ordering online. But there is the instant gratification of going in-store and being able to pick out and see what I’m buying.
ERIKA, 19
While Gen Z grew up entirely with digital and mobile technology at their fingertips, their penchant for in-store shopping is strong. In fact, our data shows that Gen Z shops in-store more than Millennials and Gen X and at a similar rate to Boomers.
Companies are much better off losing volume by cutting promotions than losing volume by closing stores.
Simeon Siegel, Senior Retail Analyst, BMO Capital Markets
In the Trade Area
Average Online Basket Jumps With a Store Opening
$104
After
$94
Before
Established Retailers
While opening a new physical store leads to a positive halo effect for retailers, the opposite is also true.
Online Sales Decrease After Closing a Store
(Established and Emerging)
All Retailers
Established Retailers
Online Sales Increase After Opening a Store
Decrease in Total Online Sales by Category
-32.2%
-26.1%
-19.4%
-17.0%
In the Trade Area
In the Trade Area
Share of In-Store Revenues By Age
In the Trade Area
TENNESSEE
$120
After
$111
Before
Emerging Retailers
I'm 5’2”, so a lot of clothes that are mass produced don't fit me. That’s why I prefer going in person to shop and build trust with a brand. I know people at the stores that I frequent. There are workers that know me by name. It’s a consumer relationship that you can’t get from behind a screen. If I need a lip gloss that’s running out, that won’t stop me from ordering online. But there is the instant gratification of going in-store and being able to pick out and see what I’m buying.
ERIKA, 19, TENNESSEE
The impact of closing a physical store is even more pronounced on combined in-store and online spending.
Big Box Specialty
Cosmetics
Apparel
Discount Department Stores
Department Stores
Home
-6.3%
-36.2%
-37.2%
-41.6%
-48.9%
-59.3%
In the Trade Area
Impact of Closing a Store on Total Spending
Online sales decline after closing a physical store in most retail categories.
+6.9%
+6.8%
+13.9%
-11.5%
Emerging Retailers
-11.6%
-5.2%
Now For a Look At Generational Impact