This is a Quora question about how retail stores could prosper that I was asked. My answer is as follows.
I think it comes down to four areas.
Exclusivity
You are the only retail location that sells a product that consumers want. I think the product category that best fits this would be art. In this case, you are a monopoly and have great potential for staying power.
Convenience and Price
For product categories where products are sold across multiple channels, it comes down to two things: convenience and price. Consumers are going to purchase where it is easiest for them, assuming the price is generally competitive. Companies like Amazon are winning at this game in my household because it is so darn convenient to purchase, and I know that for the most part, they are competitive on pricing, so I do not worry about having to shop around. Retailers who sell products that are sold elsewhere have to think about what can they do to provide the most convenience at a competitive price to win business.
Experience
Besides exclusivity, another area where retailers can win is in providing a unique experience for consumers. You can take commodity products sold everywhere and wrap a unique experience around it to create differentiation.
Non-Shippable
For products whose weight-to-price ratio is high, then shipping online does not make sense (bags of chicken feed come to mind). Or, the product is subject to damage during shipping (charcoal comes to mind). Or, the product cannot be shipped due to special shipping, storage or handling requirements (auto fuel comes to mind). Or, the products can be purchased at retail at significant discount in bulk quantities (purchasing at club retail stores comes to mind).
