From clicks to bricks: Why online brands are getting physical
For years, media headlines have declared the death of the high street at the hands of e-commerce. But, while several well-known retailers have indeed shut up shop or cut back on store numbers, a growing number of digitally native brands are investing in bricks-and-mortar spaces to complement and support their online offer.
At the last EuroShop, the World´s No. 1Retail Trade Fairtrade, were already first signs that Pure Player and online start-ups are also increasingly looking offline. 3 years later, at EuroShop 2020 from 16 to 20 February in Düsseldorf, Germany, this will now be one of the major topics of the industry.
In fact, a report published by property firm JLL towards the end of 2018 predicts that online retailers in the U.S. will open 850 stores over the next five years, demonstrating the value these brands place on having a physical presence. “Everyone is saying that physical retail is dying, but online brands are opening at a pretty fast and aggressive rate,” says Taylor Coyne, Research Manager of Retail for JLL, in the report.
Despite the continuing growth in online sales, the majority of consumers still prefer the experience of shopping in-store, and more and more digitally native brands are using physical retail to their advantage.
Online and offline: Best of both worlds
In the U.S., online eyewear company Warby Parker opened its first physical retail space in 2013 (three years after it was established) and now operates more than 90 stores across the U.S. and Canada. It is often cited as one of the first digitally native brands to understand the complementary relationship between online and offline channels.
More recently, digital-first beauty company Glossier has generated huge global interest with its pop-up shops, showrooms and flagship store in New York City, which has been likened to “adult Disneyland”, offering an otherworldly experience.
Even online giant Amazon – the great enemy of the high street – has moved into bricks-and-mortar retail with Amazon Books, Amazon Go and Amazon 4-Star.
These companies, among many others, are streamlining what they have and making the experience of the store the focus, claims Coyne.
Glossier’s three-storey flagship in New York, which opened towards the end of last year, is designed as an immersive community space where customers can get to know the brand and each other. Created in collaboration with Gachot Studios and architecture firm PRO, the space enables customers to hang out with “offline editors”, test and shop products, and immerse themselves in a Glossier universe. According to an article in The New York Times, the store offers what are quickly becoming the three Cs of the digital era: community, conversation and content.
In Europe, Polish footwear e-commerce retailer Eobuwie.pl has also recently stepped offline with a new proposition that seamlessly blends the digital and physical on the high street for an exciting, easy-to-shop alternative to traditional footwear stores. Designed by UK-based Dalziel & Pow, the digitally enabled store has no physical product on the shop floor. Instead, customers search and order shoes on interactive touchscreen tablets, which are then delivered from the vast stockroom via a racking system behind the cash desk.
“This ambitious and challenging concept blends the convenience of online shopping with the fast fulfillment of bricks-and-mortar,” says David Dalziel, Creative Director of Dalziel & Pow, which has also worked with online brands Missguided, Boden and Joe Browns.
According to Dalziel, service and theatre are engrained into these new propositions, often breaking rules of hospitality, staffing, commission and consultation, to elevate the customer experience.
Experience, adds Dalziel, is at the heart of the new brands to physical space, and when the physical space supports the web offer, the results can be powerful.
Return on Experience
Today, understanding the true benefits of opening bricks-and-mortar requires reassessing the role of the store and re-thinking traditional measures of retail success, claims Michelle Du-Prat, Co-Founder of Household Design. “Customers increasingly trial products in-store and purchase online, therefore retailers need to move away from sales per square foot as a measure of success and recognise the role of the store beyond this – driving online sales, building brand love, nurturing long-term customer loyalty.”
For Nigel Collett, Chief Executive Officer at architecture and design consultancy rpa:group, it’s now about focusing on the return on experience rather than return on investment, where short-term income is demoted in favour of creating authentic long-term relationships. “Arguably, online brands aren’t driven by the ROI of given location, but look at the wider impact; the halo effect,” he notes.
The Halo Effect
Interestingly, a new report in the UK into the so-called “halo effect” suggests that retailers that do not maintain a bricks-and-mortar store in a catchment alongside a transactional website typically experience 50 per cent lower online sales compared to those retailers that do have a physical presence. The research, by CACI, found that sales are an average of 106 per cent higher inside the catchment of a physical store, rising to 124 per cent in sportswear, 127 per cent in fashion and 154 per cent in electronics.
Since Eobuwie.pl launched its digitally led stores in Eastern Europe (now totaling six with more in the pipeline), the company has increased its turnover by a substantial 70 per cent.
In a similar study in the U.S. looking at how bricks impact clicks, it was found that opening one new physical store in a market results in an average 37 per cent increase in overall traffic to that retailer’s website, compared with web traffic prior to the store’s opening. Furthermore, the study suggests that the halo effect produces the opposite result when stores close, as web traffic tends to fall.
“When planning, retailers need to consider how the presence of brick-and-mortar locations – places where consumers can not only see merchandise up close but also interact with sales staff and even make returns – sustains the mutually beneficial relationship between physical and digital retail,” says the report, published by the International Council of Shopping Centers (ICSC).
Digitally native vertical retailers such as Allbirds and Casper, which have opened bricks-and-mortar stores for categories ranging from menswear to mattresses, show how physical locations are an indispensable part of the retail mix, concludes the ICSC report. “Brick-and-mortar stores are places where brands can make genuine connections with consumers who are considerably more informed today than they were yesterday.”
Casper – the global sleep company founded in 2014 - first launched a suite of pop-up shops across North America in 2017 following customer demand, before opening its first permanent space at the beginning of 2018. “The demand to experience our products in person has continued to grow exponentially,” said Casper Co-Founder and CEO, Philip Krim at the start of the retail expansion. “Casper retail environments allow us to seamlessly traverse online and offline, which we believe is paramount to an exceptional customer journey.”
Online lingerie company Adore Me also moved into bricks-and-mortar in 2018 following frequent requests from its customers. “With our growth trajectory, establishing physical retail in more cities across the U.S. was an excitingly natural step for us,” says Iris Voltaire, Business and Brand Development Manager at Adore Me. “We believe the demand for brick-and-mortar stores is related to the emotional and intimate aspect of trying on lingerie in person. We want to offer customers the option to come into our physical store, let them touch our product and fabrics, and get a personal one-to-one fitting with our stylists.”
In the end, it all comes down to experience. To build a successful store, retailers should differentiate with an experience signature, advises Nathan Watts, Creative Director at FITCH. “What does this brand stand for, and how is that relevant for the customer? Based on that, choose locations and offerings with the care and thoughtfulness of an online retailer. Less can be more in terms of store locations and openings, because it helps focus and prioritise investments into the experience, rather than widespread investment and generic experiences all round.”
Ultimately, consumers want a seamless shopping journey, and retailers should therefore be looking to integrate their online and offline channels to ensure a consistent brand experience. “The real opportunity is when brick and click are not oppositional but integrated touchpoints to be enjoyed and used as part of the overall customer experience,” says Watts. It is not a question of whether online or offline have a future, but how brands use both in a meaningful way.
Especially for Pureplayer EuroShop is the ideal platform to find all solutions necessary for the operation of stationary shops. This applies not only to technology, but above all to store design, shop fitting, visual merchandising, lighting and digital marketing solutions for the point of sale. At EuroShop, the entire range of all necessary components will be covered to turn shopping worlds into worlds of experience for the customer.
EuroShop 2020 is open to trade visitors from Sunday, 16 to Thursday, 20 February 2020, daily from 10.00 am to 6.00 pm. 1-day tickets cost EUR 80 (EUR 60 purchased in advance online/e-Ticket), 2-day tickets are EUR 120 (EUR 100 purchased as e-Tickets) and season tickets are EUR 180 (EUR 150 e-Tickets). Admission tickets include a free return trip to EuroShop on all networks of the VRR transport authority (Verkehrsverbund-Rhein-Ruhr). www.euroshop.de