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Retail Innovation|June 18, 2019

Online Isn't Enough, Disruptive Brands are Opening Stores

Big news! Not everyone is a regular online shopper. In fact, no more than half of people shop online in an average of three months. As a result, many online-first brands have found it necessary to open stores. Here are seven familiar sites that have joined Main Street.

It looks like someone has thrown a brick into the fast-growing e-commerce engine, and it’s resulting in tons of bricks on the street.

Our How America Shops® studies show that online shopping in an average of three months has peaked at half of shoppers. Sure, online growth is in double digits, because online shoppers use the channel to order more, but at least half of shoppers are simply not showing up to buy at websites.

The takeaway is simple, and the one we’ve been advising for years: Follow the shopper – and not just to online sites but back to the bricks as well. Brands and retailers tend to get dazzled by the rapid growth of e-commerce, but it still represents only 10% of all retail sales, according to Census Bureau estimates released in May.

This is forcing many digital-only merchants, from Warby Parker to Birchbox, to get their hot brands into physical stores in order to grow. Some chose the old-school path of hanging their own shingles. Others are testing more creative, less-risky strategies.

As always, shoppers will determine the winners. Until then, here’s a look at what some of the brightest online-first brands have in store.

  1. Warby Parker: The eyeglass-frame maker that disrupted the vision-wear industry had to make some vision adjustments itself. Just a few years after it was founded in 2010. , Warby Parker began opening physical stores in 2013 and pretty much spearheaded the online-to-offline trend. Today it operates nearly 100 locations in 30 states.
  2. Amazon: The world’s largest e-commerce retailer introduced its first physical concept, Amazon Books, in 2015 and now counts 100 stores under various Amazon banners. It also bought into brick retail with the acquisition of Whole Foods and its nearly 500 supermarkets in 2017.
  3. Rent the Runway: The temporary-clothing merchant became a brick merchant in December 2016, in Manhattan. Today it’s up to five locations: in San Francisco and Topanga, Calif.; Georgetown, D.C.; Chicago; and New York.
  4. Birchbox: The beauty subscription service opted for a different growth strategy and is placing its sample boxes in the aisles of a major traditional retailer – Walgreens – after trying its own pop-up stores at Gap and elsewhere.
  5. Casper: The mail-order mattress company runs eight experiential sleep shops in New York, New Jersey, Pennsylvania and Massachusetts and plans to open 200 locations in the next three years. This is in addition to its product sales at more than 1,000 Target stores.
  6. Bonobos: Purchased by Walmart in 2017, this online-first men’s apparel brand now operates dozens of locations under the brand name Bonobos Guideshop from New York to California.
  7. Indochino: The men’s made-to-measure suit retailer opened its first physical stores in its home country of Canada in 2014. It’s since expanded to 50 locations on both sides of the U.S.-Canadian border.

Online and brick merchants are both fast-adjusting to the same crucial fact: Most shoppers still want to touch, feel and try on their potential purchases in a physical setting before deciding to buy. And online-only brands, regardless of the size of their digital base, need all shoppers to grow.

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