Why 2 out of 3 Digital Native Brands Are Opening Physical Stores
Out with the old and in with the new! And no – we aren’t talking about the transition from physical to online retail. – On the contrary, what we’re actually talking about is the transition in the other direction, from click to brick, from the “boring” old retail story, to the new and exciting future of retail.
Online retail is a great way to increase brand awareness, simplify the shopping experience, and advertise all available goods, but in the nicest terms it’s simply transactional. The increasing rate at which digitally native brands are ‘going old school’ and opening pop-up shops is all with reason, so let’s dive in.
Reason #1 : The Relationship
Let’s play a game.. Never have I ever gone online shopping in a state of psychological nurturing and filled a shopping cart only to realise I don’t NEED any of the selected items. You raised your hand didn’t you. Ok – let’s keep playing. Never have I ever entered a physical retail location and filled up a shopping cart, tried everything on, conversed with the sales associate and still left the actual full cart at the door and never looked back. I’m sure you have, but certainly not as frequently. As stated by Use Hero: “Because they know brick-and-mortar stores convert at anywhere up to 30% — much higher than their websites, physical stores have a killer advantage that is — at present — missing from ecommerce: expertise from associates”.
You see, personal relationships, expert advice and physical presence is a sure fire way to increase conversions. And although you have to get up off the couch and make it to the store, native online retailers are entering the brick-and-mortar market fully prepared to motivate that move. Human-led experiences can turn a retail location from a store to an environment, full of living breathing action. This can come from the various experts that can assist, answer, provide advice, or engage you in your shopping experience. Take the Apple Genius Bar, if there is an Apple in your area, you’re more likely to make a ‘Genius’ appointment, to have your problem solved, in the flesh, in real time, rather than dealing with computers in a time of crisis.
A great example of a click to brick transition that places it’s customer relationship at the forefront is Cotopaxi – a high quality purveyor of outdoor gear and clothing. By strategically positioning their physical expansion in the “hub of adventurous outdoor activities – Salt Lake City” Cotopaxi managed to make themselves accessible to a strong audience of consumers. In addition this, they uniquely designate 2% of their revenue each year to organizations that work to put an end to poverty. This action is key to building a quality relationship with your consumers, as they can dedicate themselves to a cause while committing to your brand, solidifying your relationship while you find purpose in something bigger than both brand and buyer, a worthy cause.
Reason #2: The Experience
This new transition from click to brick is more than just opening up shop, and staying there and the same way for the next 20 years. Strategies like surprise pop-ups can be an easy way of thrilling your consumer if that’s what you’re going for (location depending).
Pop-up shops are full of surprises, from workshops, extended hours, virtual or other technological participation, and lectures or guest speakers. These activities show your expertise and provide added value to customers. They help to solidify the brand-buyer relationship, by involving them in more than just the transaction. There’s no better way to position your brand as an industry thought leader who deserves to be on the physical stage, than by letting customers experience your brand and mingling with the people.
Depending on the nature of your products, a pop-up shop is exactly what you need to demo a new release, letting your customers try it on for size and experience it first-hand, and according to Brendan Witcher, the principal analyst at Forrester: “Many customers want to have an experience that allows them to hold and touch and in some cases, try on, the products,”. Tech-giant Google recently began popping up shops internationally to demo its recent releases – the Pixel smartphone, the Daydream View VR headset and Google Home. As consumers, online we depend on reviews, and we trust the opinions of others. When we test products first-hand, we tend to trust the retailer themselves. As stated by V12 data regarding consumer shopping trends “More than half (54%) of retailers said the customer experience is their most important area of focus”.
Take French fashion brand Sezane who coins themselves “The first online fashion brand, from Paris with love.”. Sezane got their start and audience with clicks, and has more recently turned to bricks, opening up “Apartment” style stores in select cities such as London, Paris and New York. They managed to perfectly position themselves in the market as a mid-priced, high quality, accessible brand that allows anyone in the world to have the effortless chicness and elegance of French fashion. By the time Sezane Apartments began popping up, their customers were waiting outside the doors for the chance to enter and experience the French lifestyle and atmosphere, radiating from the newly opened doors. This experience of feeling as though you are inside an elegant and timeless Parisian apartment, is enough to bring customers back for more. Each location is different in layout and decor further drawing their loyal consumers with the desire to discover and experience all 3.
Reason #3 : The Success
The success can further be broken down into all the ways that pop-up shops or brick-and-mortar shops can be profitable. Financially, a physical store front for a traditionally digitally native brand can increase sales volume right off the bat. Traditional shopping habits die hard as only “13% of retailers described themselves as “digital-first.” The majority are still primarily led by brick-and-mortar operations” according to V12 data. Purchasing in store leaves consumer with a general sense of security. Security that there are no hidden or extra costs, that their product fits or is exactly what it seems in dimensions and quality, and security that if they find the need to return the product they can return to the store with their physical receipt and not have to worry about packaging and shipping.
Brands as luxury as Hermes (who opened a silk bar in a storage crate in Causeway Bay in Hong Kong) or as household as Coca Cola (who opened a public kitchen and tasting bar in tandem with the Culinary Institute of America) have been cashing in on the sales, awareness and excitement that comes with a temporary pop up shop.
By opening a pop-up shop, you can affect your business’s success in various ways, financially and socially. With online marketing costs rising (due to more competition on a few couple of channels such as Google AdWords, Facebook and Instagram), having a physical store might make more sense. Although your audience might be smaller and your man hours limiting, you inevitably will face less competition on the street than on the browser. Additionally, depending on the nature of your business, an offline shop might be much more profitable. According to Regency Centers “leading retailers over the last few years support this conclusion. For example, the Wall Street Journal reports, “Kohl’s Corp. says its profitability online is less than half what it reaps in its store”, and “Target Corp. says its margins will shrink as its online sales grow.”
More recently we see larger exclusive digitally native brands such as Google, Amazon and Warby Parker turning from Click to Brick. These companies that have been turning heads in the street as they appear so out of place off of the browser, drawing in foot traffic and for the first time providing an in person experience and interaction with their brand.
If your digitally native brand is interested in opening a pop-up shop, check out www.popupshops.com for more information on where, and how to begin the process. Let us help you find an ideal location and help you to open the doors on your first pop-up shop!