In the retail industry, 2017 was a record year — but unfortunately not for a reason we should celebrate.
More stores closed in the US in that period of 12 months than any other year on record. Last year’s closures even managed to beat the previous record of 6,163 store closings in 2008 — mid-financial crisis.
Why, then would any digital-native brand ever think about opening a brick-and-mortar store in this climate? Ecommerce is the future, right?
Well, not exactly. Ecommerce giant Amazon reported sales of $1.27 billion for its brick-and-mortar stores, while digital-only ecommerce brands like Bonobos and Warby Parker doubled down on their investment in physical stores as well.
Everyone is talking about stores closing, but at the same time, some of the most successful ecommerce brands are shifting offline to in-store. What would drive successful digital-native brands to follow what seems like a risky expansion strategy?
There’s a very simple reason: it works.
Customer experience is more important than channels
While you may think about your business in terms of online or in-store, customers don’t think in channels. All your customers care about is having a fantastic buying experience. This could be online, in-store, or a combination of both.
This is exactly why it’s so important to have an omnichannel marketing strategy. Any channel you choose to sell through should connect seamlessly to all your other channels, making the customer experience consistent. Your focus shouldn’t be on whether you are going to be a digital-only brand, or choose to have both a physical and digital presence. Whatever experience you want to offer, it should differentiate your brand from the competition and resonate with your customers.
This customer experience should be a reflection of how you define your brand and what you uniquely offer customers. Take fashion retailer Frank & Oak, for example, which caters mostly to the millennial market. While the brand sells online, they also aim to create a sense of community with a new Montreal store featuring large communal tables and lounge areas that are perfect for events. The company’s locations in Canada are all in creative neighborhoods — an approach resonates with its Generation Y customer base.
Ethan Song, Co-Founder and CEO of Frank & Oak, explains the choice this way:
“This idea of digital first or physical first doesn’t matter. It’s about what experience you want to offer. We differentiate by having a place we can cater to our customers and offer personalized service. We don’t measure by sales per square foot; we measure by how we engage the community.”
Online luggage retailer Away is another example. The ecommerce retailer opened their first physical store in New York in 2017 before expanding to LA, San Francisco, and Austin. The original space in New York was designed as a showroom for the product, but also much more. The space features workshops and events on topics such as food, wellness, technology, art, music, entrepreneurship, and travel.
Jen Rubio, Co-Founder of Away, explains:
“You walk in and you’re immediately surrounded by travel guides and books. You can sit in a cafe and think about your next journey. Stores are not just a place to sell suitcases, but a way to add value to the brand in a way we can’t online.”
Other brands choose to open showroom-style stores where you can try the products before having them shipped to your home later. Italian shoe retailer M-Gemi opened a shoe showroom in New York where customers can try on different styles and sizes before ordering them on the spot on a tablet, or later online. It helps customers feel secure in their purchase, and know exactly which shoe is right for them.
Get to know your customers better
It’s challenging to create personal relationships with customers when they only shop with you online. Even if you collect data from each of their interactions with your brand, ask their opinions whenever you can, and analyze the data to provide better service, you might still be missing some piece of the picture.
When customers come into your store, you can actually talk to them and find out their preferences in a way that is less intrusive than a pop up on your website or an email survey. By connecting this information with their online profile, you can provide a level of personalization — through all channels — that wouldn’t be possible otherwise. You can also train your store staff to offer fantastic customer service and build your brand even further. By adding an in-store interaction, you can give every customer a sense that you value and recognize them as individuals.
Stores don’t come in one shape and size
If you’re a smaller ecommerce brand, the idea of opening a physical store may seem like it’s out of your budget and requires resources you just don’t have. This is exactly why pop-up stores emerged. It’s an easy way for brands to get their feet wet with brick-and-mortar and has become massively popular. The pop-up industry was valued at $50 billion in 2016 with 44% of customers saying they have visited a pop-up shop in the last 12 months.
As traditional retailers close more stores than ever before, landlords are also becoming more open to shorter-term leases. Pop-up shops can help you take advantage of holiday seasons such as Christmas or Thanksgiving, or peak seasons such as summer or winter. It can also serve as a first step to see if a more permanent space is right for your brand. It’s up to you to do the research to find out what kind of store works best for your customers.
You can even get your customers directly involved in the process. When Frank & Oak first opened pop-up stores in the US, for example, it allowed its customers to vote on the locations. They did this specifically because the brand’s strategy is to only open stores where it already has a strong market. Away took another approach and partnered with the Amastan hotel in Paris to open a pop-up hotel during the city’s fashion week. The event, which featured manicurists and tattoo artists, and hosted workshops and yoga classes, coincided with the launch of a limited edition suitcase and the introduction of shipping to Paris. The idea was to provide an experience that its customers wouldn’t forget.
Whichever model you choose for your stores, it shouldn’t be static. Your in-store strategy should shift according to the data you collect on your customers’ shopping habits — exactly the way you alter your strategy according to consumers’ online buying journeys.
Increase sales in other channels
The payoff of opening a physical store isn’t just in the extra sales you make at these new locations. The real kicker is that many brands have found a significant increase in online sales around where they open new stores. It’s surprising, but the data backs it up. Online prescription glasses retailer Warby Parker found that 85% of its store shoppers will later visit its website. Online athleisure subscription retailer Fabletics found that when it opens a retail store, customers within a 30-mile radius of that store shop 2.5 more times online than in a market where it doesn’t have a retail store.
With impressive results like that, it’s certainly tempting to move in-store in some of your busiest markets. But you can’t just open a store to open a store. Your store should offer an experience your buyers can’t get through any other channel, and really add to the overall brand experience.
If you’re thinking about moving your digital-native brand to in-store, you absolutely must offer the same fantastic customer experience that reflects your brand, creates a sense of community, and fits your business model — no matter where or when the customer is shopping.