The eCommerce Winning Streak Is Over

Editor’s Note: The following is an excerpt from Nikki Baird’s recent Retail Pulse Report article “Your eCommerce Site is a UI. AI Eats UIs.” Read the full article here.

If every digital front door is one the retailer doesn’t own – has never really owned – then what is left for the retailer to actually own?

Recently, I’ve been arguing with Claude that eCommerce is in big trouble, and Claude keeps correcting me: eCommerce sales are up, and they are up higher than average total retail sales are up, which means they are coming at some expense of the store.

It’s right. eCommerce as a channel – in the sense of selling products over digital channels – is not in trouble. It still continues its slow incremental creep on retail store sales. And AI isn’t going to change that. The easiest place to send agents to buy stuff is the eCommerce channel.

Yet the eCommerce site is not a system of record. Absolutely every single thing that an eCommerce site does can be done better and in a more relevant way by AI.

eCommerce exists to help customers find and select products. The payment page is a handoff between the eCommerce site and order management, which secures the payment, secures the inventory and tracks it until the customer receives it. Order management is a system of record, a system of execution. It tracks things and it does things. eCommerce is a UI. And there isn’t anything more vulnerable to AI taking it on than a UI layer.

So when I say that eCommerce is in trouble, fine; the way I’ve trained Claude, it will call me out on that every time, because the phrase is imprecise. The eCommerce site is in trouble.

The Store Is a Defensible Moat

Here’s the thing: Consumers like stores – or they at least like what stores could / should be when appropriately staffed and appropriately merchandised. Gen Z, seeking opportunities to put away their phones and unplug and talk to other humans in real life, really want to like stores. A survey by Colliers found that nearly 80% of shoppers say “see/touch/try” is a top reason to go to stores, and 70% say just the enjoyment of the store experience is why they go. Fifty-five percent say stores are a key discovery channel, and 54% say its importance in discovery is growing.

I have to mention here, I’m not talking about grocery shopping. People need to eat and they, you know, typically need to eat every day. That puts a very different set of expectations and requirements on everything – from how consumers might use AI and what they really want the store experience to be.

For anything high consideration, especially for the things that are not replenishment but rather things that you might want but don’t really need, it’s a different game altogether. Retailers have to inspire. They have to compete not just with what’s in the closet and whether the new thing fits but also against buying this sweater vs. going to movie night. Buying this sweater vs. GTA VI.

Stores facing this kind of competition have to do way more than hang some product on a rack and plunk a store associate behind the counter.

Which leads me to the technology they need in order to enable that kind of differentiated experience.

POS Is a System of Record

POS is there not to help the customer but to help the associate help the customer.

Because, and I will die on this hill, the point of a store is to create an experience. Otherwise, just make it a vending machine and be done with it. Or better yet, close the store and just point the shopper online. Oh wait, when you close a store, online sales in the region fall. Hmm.

And while POS might look to the payment provider to help with consumer fraud, it must also help the retailer prevent employee theft and fraud. It must enable and empower store associates while limiting the exposure and damage that a store associate could potentially do.

So if anything, I can see a future of radical change for what is required in POS – the cart (the sale) is an outcome, not the start of what happens in a store. But in order for retailers to both enable store associates and limit exposure to fraud, they need one solution to rule them all.

I first started saying “stores need to change” in 2008. This is not an I-told-you-so moment. It’s me heaving a heavy sigh, because through the Great Recession, the rise of social channels, the pandemic, the current tariff / oil / supply chain and economic uncertainty, retailers still have not put together the right mix of experience, labor investment and technology enablement to make stores everything that consumers really want them to be.

Shopping in a (high consideration / low replenishment-driven) store should feel like the best kind of blackjack table. The store associate is the dealer – their job isn’t to win; they’re there to execute house rules and also help you, the customer, win.

This experience is simply not available online. It’s questionable whether a chatbot can or should provide this experience – some might call that manipulative. And that means that the technology tools that retailers need in stores are becoming both the most important and the most unique in the entire enterprise.

Where does that leave us? With some ground rules that I don’t think are changing anytime soon:

• Consumers want stores to be more than they are.
• POS has a unique role to play because it must be more than just a cart on top of an OMS.
• AI will certainly play a role in the store, but how it manifests there will be fundamentally different than online.

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