With rumors swirling that Amazon may purchase former RadioShack stores for its own retail use, many have been asking why the successful e-commerce company would want to move into a retail space. Being an online-only retailer allows a company to save on costs such as leases and employees, and managing and supplying inventory to several locations. What Amazon discovered when opening a pop-up store in New York prior to Christmas is that its customers want to interact with its brand.
Bonobos had gained a strong brand loyalty from its customers for its men’s pants. However, when the company ventured into shirts and other clothing items, its sales were lackluster. It decided to experiment with a few pop-up stores near its headquarters and sales increased. What it learned was that people really like to touch and feel the clothing. These pop-up stores did not have any merchandise and all purchases made from these stores were ordered online and shipped. The no-inventory stores, which Bonobos refers to as “guideshops,” have increased sales for the company, and it plans to expand to 40 stores nationally by year end, 2016.
Other online retailers are following suit, opening pop-up stores to see if this is something their customers want before expanding to full brick-and-mortar establishments.
Amy MacLaren, Vice President of Retail/Urban/High Street Brokerage Services states, “We are seeing retailers understand and respond to the experiential trend of our retail world. The brick-and-mortars help to legitimize these brands with their customer. It also allows the retailer the opportunity to WOW the consumer with the experience of their retail environment first hand.”
Warby Parker, a socially conscious eyewear provider, found its customers liked to interact with its products in a physical setting. While a majority of its sales still come from online purchases, its stores have also been profitable, averaging just under $3,000 in sales per square foot. Warby Parker currently has 14 stores and showrooms throughout the US with plans to open more.
Birchbox, a beauty products purveyor, decided to explore brick-and-mortar because of consumer demand. Birchbox set out to create an offline experience for its customers that incorporated the personalized features from its e-commerce site that its customers enjoyed. Unlike other beauty product stores, Birchbox merchandises its store much like its website with products organized by category and not by brand. It also tested out a few pop-up stores before opening its first location in New York.
Women’s clothier Modcloth recently announced it is exploring opening stores similar to Bonobos’ guideshop concept. Its CEO states that physical stores are a key part of its web retail strategy. Modcloth opened a pop-up store in LA in April, 2015.
Retail real estate experts see the success of both online and web and do not fear that e-commerce will take away the need for stores and the customer shopping experience. Warby Parker co-founder Neil Blumenthal states “We believe the future of retail is at the intersection of e-commerce and brick-and-mortar.” Web retailers have realized the power of the consumer experience and brand immersion, and are seeking to expand their brand to capitalize on that notion. It’s not just about buying, it’s about experiencing.