Digital Or Physical Stores? - The Answer Is Both, Says This Analyst Looking On Retail Real Estate Trends - Target (NYSE:TGT), Best Buy Co (NYSE:BBY), Abercrombie & Fitch (NYSE:ANF), Carter's (NYSE:CRI)

Telsey Advisory Group analyst Dana Telsey said physical stores remain the greatest source of new customer acquisition for most consumer companies.
And, the pandemic removed the pre-pandemic conversation of “either or” between digital and physical channels, noted the analyst.
Today, post-pandemic, with the lack of new shopping center development, brands and retailers are paying up for A and B centers and embracing the physical footprint in all aspects, said the analyst.
Whether it be store openings, with adjustments being made to size and location, or remodels, with improved adjacencies and a better experience for the customer and the staff, the companies are doing all.
Store also are increasingly being used for fulfillment of digital orders, with companies working to drive attachment sales, opined the analyst.
Academy Sports And Outdoors, Inc.ASO saw that in 2022, approximately half of its e-commerce sales bought online, picked up in store, and over 75% of all e-commerce sales were fulfilled through its stores, said the analyst.
Carter’s Inc CRI mentioned that in 2022, 35% of its online transactions were supported by stores, up from 28% last year.
Home Depot Inc HD stores fulfilled approximately 45% of the company’s online orders in the fourth quarter.
Duluth Holdings Inc DLTH are fulfilling a large portion of direct orders; during the fourth quarter, the stores fulfilled close to 20% of direct sales demand.
Target Corporation TGT stores fulfill over 96% of all purchases (combined in-store and online), and its new large format store in Katy, Texas, has a digital fulfillment area that is 5 times larger than the average store.
Walmart Inc WMT commented that over the last two years, store fulfilled delivery sales have nearly tripled, reaching over $1 billion each month
The analyst said companies like Abercrombie & Fitch Company ANF, Macy’s Inc M, and Best Buy Co Inc BBY are opening smaller stores.
Companies are also testing on new store designs and exploring store of the future concept to drive traffic and sales, opined the analyst.
The analyst also added that the companies see rural and smaller markets as an enormous expansion opportunities.

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