I think if I were to open a store I might lean towards making it an online store, but ideally I would like to have an online store and a physical store. Having an actual physical store allows you to establish a real environment that people can feel comfortable with, allowing them to feel comfortable buying from you in the future in your online store. I think Apple (yes I realize their like the best company in the World, so of course they do this great) does a great job of having both an amazing physical store presence and online store. After having spent a half hour in one of their stores you truly feel like they are superior to any other products, just because of the way they present themselves.
There are benefits to both. As of the moment I still think customer service in person is still better than online, but this is changing fast as online customer service support becomes better, and may become a thing of personal preference among customers. Of course a benefit of online stores is that you don't have to go anywhere! If you know what you want you get it delivered right to your door step.
I don't think that actual stores will completely fade away. I think it is more that if you want to be a successful brick and mortar establishment you have to also have a significant online presence to coincide with. Unless you are a truly unique store with a loyal customer base in a niche market I think you will need an online presence to stay alive.
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