Disruption is the word of the day as consumers have abandoned traditional brick and mortar stores for the ease and convenience of shopping online. Many of our favorite stores – large and small, global and local – have closed over the last few years, including Borders and Sports Authority. Others, like Sears and Kmart, are on the brink of disappearing, and mainstays like Macy’s and JC Penney are downsizing.
While this trend will continue, we have seen the beginning of a countervailing trend with the emergence of “clicks to bricks” retail. For those of us involved in creating brick and mortar stores, this may indeed be good news as online retailers step out of their virtual platforms to build new stores in cities and neighborhoods. At the forefront of this movement are successful online retailers such as Warby Parker, Bonobos and Birchbox, who have capitalized on their online presence to create profitable and popular stores as a pathway to greater customer engagement and growth. And of course, there is the online behemoth Amazon who, with 10 bookstores either built or underway and other retail projects planned, is in a class by itself.
What is happening? Why after the imminent death and demise of brick and mortar stores at the hands of online retailers are we seeing new retail brands starting to build stores? One reason is that these online retailers know that despite the convenience of online shopping, the majority of consumers still prefer the in-store shopping experience. They want to see the merchandise, touch it, and try it on, which can only be done in a brick and mortar store. Retailers also know that customers like the convenience of shopping online and picking up their merchandise the same day at a nearby location, or when the purchase does not work out, returning the merchandise to a nearby store. Additionally, once a customer is in the store, there is always the opportunity to make another sale.
Another consideration is that online retailers, especially Amazon, have benefited from having local retailers effectively be their showroom so there has been little need for them to build stores. How many times have you gone into a local store to check out the merchandise only to make the final purchase online in the convenience of your own home? However, as more stores close their doors, there are fewer “showrooms” available. With Borders closed and Barnes and Nobles downsizing, Amazon built its first brick and mortar bookstore in 2015 in Seattle to meet shoppers’ need for a place to see, touch and experience the merchandise in person and to sell Amazon’s growing product line.
Online retailers have several advantages in opening new stores. They are established brands who already have a strong presence with effective advertising campaigns. And they have a purchasing, warehousing and delivery infrastructure in place which can readily be expanded to support the growth of brick and mortar retail expansion. Online retailers also possess a tremendous amount of real data on their customers from their online sales, which allows them to be far more targeted in selecting retail locations that best serve their existing customers. They know their shopping patterns, their likes and dislikes, and can parley this information into well-considered merchandising decisions and store locations. And once opened, physical stores attract new customers who will then shop with them online. It is a win-win.
It is interesting to note that many of the online retailers opening stores are niche players with a strong online presence. In addition to Warby Parker, Bonobos and Birchbox are Athleta, Blue Nile, Rent the Runway, Trunk Club and others who have ventured from pure online retail to building stores in multiple locations. They have capitalized on their strong online following by establishing successful stores close to their customer base that provide a more personalized service to their customers. Used as marketing vehicles, their new stores also create greater brand awareness and offer new opportunities to expand and grow their business.
What is becoming apparent is that retail has increasingly become a multi-channel experience. Existing brick and mortar retailers have sought to compete with online retailers by expanding their online presence. Now we are seeing the opposite trend with online retailers expanding into brick and mortar locations. Given the success of Warby Parker and others, expect to see more online retailers looking for retail locations in a neighborhood near you.
Kenne Shepherd, AIA, LEED AP+, is Principal of Kenne Shepherd Interior Design Architecture PLLC (KSI) a New York-based, certified woman-owned Interior Architectural design firm. Working in the tristate area and nationally in the U.S., KSI is known for creating customized interiors that refine and express the client’s unique vision, values, and mission into sophisticated, contemporary environments. Kenne Shepherd was recently recognized as one of “The Top 15 Women in Real Estate” by Sokol Media and is on the Board of CREW New York as CREW Network and Member Recognition Chair