Pure-play e-commerce retailers are venturing into the world of brick-and-mortar retailing.
RETAILERS OF EVERY STRIPE are dreaming of an omnichannel future. Even as traditional retailers like Walgreens, Macys, Wal-Mart and others are polishing their online presence, e-tailers — retailers that started as purely online merchandisers — like Birchbox, Bonobos and Warby Parker are beginning to open and reap the benefits of real brick-and-mortar locations: additional purchase points, testing labs for new and existing products, same-day pick-up, shipping centers, return locations, help desks and more.
According to EMarketer.com, which researches digital retail marketing trends, these e-tailers are dipping their toes into brick and mortar to enhance their online businesses. “Physical stores give them a chance to better define their brand and expose it to a whole new range of customers, while at the same time giving them customer insights as they watch who comes into the stores and how they interact with the products,” the website notes. “To put it another way, they’re opening stores less for direct response and more for branding and market research.”
Not a New Trend
Despite all the hype, “this is nothing new,” commented Faith Hope Consolo, chairman of The Retail Group, Douglas Elliman Real Estate, in New York. She noted that a number of companies that began as catalog merchandisers, such as Sears and Talbots, eventually became brick-and-mortar retailers. “The idea behind both, and behind all retail, is to find an efficient way to present and then deliver your goods to the customer,” she explained.
Faith Hope Consolo
Consolo said that some of the other high-profile e-tailers who have opened brick-and-mortar locations include Baublebar, Gemvara, Indochino, JustFab, LXR & Co., and several Gap Inc. brands, including Athleta.
Today’s “click” retailers are turning to “bricks” because they have discovered that shoppers a) want to touch and try on merchandise and b) like the social aspect of shopping, according to Consolo. “It’s a lot more fun to ask someone what they think of an item than to take a picture of it and wait for someone to answer you on social media. Plus, retailers have the benefit of add-on purchases as the shopper walks by something else in the store. The thinking is exactly the same as ‘traditional’ retailers who have embraced the Internet — it’s all about omnichannel for everyone.”
Many e-commerce retailers begin with a pop-up, sometimes inside an existing store, to learn the ropes of opening a physical location and to test markets and submarkets relatively inexpensively, Consolo added. “Etsy has done this inside West Elm Stores. eBay pops up at the holidays. This is a smart thing for them to do, and keeps neighborhoods vibrant on the real estate end,” she said.
Indochino Starts With Pop-ups
Kyle Vucko, co-founder and CEO of Indochino, said that the firm did not set out to create an e-commerce business, but rather “set out to build a company that helps a guy to look good and be confident. Everything we have done has been to support this core vision. It was this same vision that led the move into brick-and-mortar retail.”
Indochino’s newest showroom opened in Philadelphia in January 2015.
According to Vucko, in 2011, having found that some men prefer a face-to-face experience, Indochino created a pop-up event in its hometown of Vancouver. The pop-up was open only a few days, but the company was astounded at its success. “Three years later,” he said, “we had traveled all around North America hosting about 30 pop-up events that lasted anywhere from four days to six weeks.”
Indochino learned a lot about how its customers like to shop from the pop-ups. In 2014, it opened its first showroom in Vancouver as a physical extension of its website. The store mirrors the company’s online purchasing process. “A guy enters the showroom, has a consultation with a style guide and gets professionally measured before selecting a fabric and building his custom suit,” said Vucko.
The company refers to its brick-and-mortar locations as showrooms rather than stores, because they hold no inventory, aside from accessories. Every suit and shirt is custom made to order and is delivered in four weeks. The customer then returns for a second fitting and, the retailer hopes, starts building a lasting relationship with the team at the showroom.
“We opened in Toronto in August 2014, … followed by New York and San Francisco,” Vucko said. “Most recently we relocated our Vancouver showroom from our offices and into a busy shopping area.”
Bonobos Finds a Ready Market
Bonobos, an e-commerce-driven apparel company headquartered in New York that designs and sells men’s clothing, launched in 2007 as a strictly online retail operation that aimed to provide the best customer service possible. According to a Bonobos spokesperson, “we were not even thinking brick and mortar at the time.”
The company’s initial experience with brick-and-mortar retail occurred at its New York headquarters in the Flatiron district. The e-tailer began by furnishing an area at its headquarters where customers could return items. This was later expanded. Since customers already were coming to the headquarters to return merchandise, why not also allow them to try on other clothes there? The area got so busy, the company created a sign-up sheet so that customers could make an appointment to meet with a “ninja,” a Bonobos salesperson, to be properly fitted and try on garments. “We quickly discovered that the sign-up sheets were completely booked for the next two weeks. We realized that there was something to this,” said the spokeperson.
From that initial experience, Bonobos began to establish “guideshops” around the U.S., where men (or those buying clothes for them) meet, by appointment, with a ninja who spends an hour with them, helping them try on garments and getting their sizes. The guideshops do not contain a complete line of clothing. Instead, they carry all sizes, fits and styles of a particular item, like washed chino pants, but only in one color. When the shopper finds his size and determines the colors he wants, the ninja will help him order the product. It arrives in a day or two and delivery is free. Limiting the amount of inventory in each guideshop enables the ninjas to spend their time focused on customers, rather than refolding and keeping track of merchandise.
“As we have evolved, we have found that our customers do want to touch and feel the merchandise, especially some of our more tailored items, like shirts,” said the spokesperson. “So we now take an omnichannel approach with multiple touch points to satisfy how our customer wishes to shop.”
The guideshops range in size from 500 to 5,000 square feet; a typical one is about 1,200 to 1,500 square feet. The company currently has 11 guideshop locations around the country and is planning to open in 20 to 30 additional markets over the next two years.