You might wonder why successful online brands—like Tea Collection, Alo Yoga, Allbirds and Voluspa, just to name a few—have opened physical stores. Even mattress-in-a-box companies like Casper and made-to-measure apparel brands like Indochino have rejected their own business model and moved into brick and mortar. What are they thinking?
At first blush, it may be hard to understand why a company selling directly online―with the advantages of low overhead, centralized or regional inventory centers, and few customer-facing personnel―would enter the world of expensive mall rents and often high turnover employees. But there are some real opportunities of having a physical presence that, for some companies, outweigh the costs.
With certain products, seeing and feeling makes a difference. Eyeglasses are a very personal product and can be challenging to fit. If a shopper buys them online and they don’t fit, they have to send them back and wait for either a refund or for the company to adjust them and send back. By trying on in store, the customer can ensure the fit and check out the look. And when they pick them up, there are professionals on hand to adjust them. No return shipping to pay or waiting in line at the Post Office.
Casper took a homey approach to its first physical store in New York. The store features six ‘mini-bedrooms’ where customers are able to test out the retailer’s range of mattresses, pillows, and bedsheets. This experience is far different from the traditional mattress store with 20 beds in a single stodgy white space with harsh fluorescent lights. Casper makes shopping for a mattress fun, comfortable, and more private. Simply put, Casper's store delivers a sensory experience impossible to replicate online.
A study by Time Trade showed that 85 percent of consumers prefer to shop in physical stores vs. online. The same study showed that more than 70 percent of consumers would prefer to shop in a brick and mortar Amazon store versus Amazon.com.
The main reasons why customers opt for shopping in stores: immediacy (instant gratification) and product help. However, it’s important to note the ways that consumers shop in stores has changed. First, consumers often search for products online first before entering, and sometimes even while they are in a store. In addition to detailed product information, they can do instant price comparisons. Of course, things like private label and unique products help overcome the latter challenge.
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And don’t discount the massive brand awareness that comes along with being in a high traffic mall. Many of these stores are opening in large indoor and outdoor shopping centers, sometimes just testing the water with pop-up stores. Brand Box, for example, offers short-term leases and many tools to help brands succeed as they navigate the new frontier of brick and mortar The mall takes on a large part of the responsibility for advertising to get that foot traffic.
Strolling through a store and enjoying the aesthetic of products is a pleasure that for many people cannot be replaced by a website. More often than not, in-store promotions and browsing result in higher purchase volume. According to a study from the Journal of Consumer Psychology, 89 percent of women and 78 percent of men who visit physical stores said they added additional items to their cart beyond their identified needs.
All in all, physical stores have the potential to be an online brand's ticket to faster growth. But before you rush to lease store space, ask yourself the following:
- Are your products unique and challenging to comparison shop?
- Do the stores nearby or in the mall attract similar customers to yours?
- Will your products sell better if people can see, touch, and try them?
- Does your product mix include relevant related products for upselling?
If the answers to most or all of these questions is "yes," you may benefit from expanding offline.
Beth VanStory is a Partner with Chief Outsiders, the nation’s leading fractional CMO firm focused on mid-size company growth, where she serves as a fractional CMO for clients. Her retail experience includes launching and leading OfficeDepot.com and serving as a board member of Michael’s Stores. More info at chiefoutsiders.com.
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Topics: Business of Retail