retail news in context, analysis with attitude

The New York Times this morning writes about how "after years of criticizing physical stores as relics, even e-commerce zealots are acknowledging there is something to a bricks-and-mortar location. eBay and Etsy are testing temporary stores, while Piperlime, the Gap Inc. unit that was online-only for six years, opened a SoHo store this fall. Bonobos plans to keep opening stores, and Warby Parker, the eyeglass brand, will soon open a physical location.

"The companies say they are catering to customers who want to see what they are buying in person, and who see shopping as a social event. As they build the locations, though, the retailers are reimagining some long-established rules - carrying less inventory, having fewer staff members and embracing small and out-of-the-way locations. In the process, they are creating what could be a model for efficient in-store operations: the store as a showroom."

Bonobos is cited as an example of how trends have shifted; it was just five years ago that its CEO, Andy Dunn, was giving speeches about the end of physical retailing and arguing that bricks-and-mortar stores were a bad economic investment. Now, Bonobos has six locations.

"Mr. Dunn did not want a typical retail model that required carrying a heavy inventory, staffing for heavy foot traffic and paying for prime real estate," the Times writes. "Instead, he took 700 square feet in Bonobos’s existing fifth-floor office and converted it into a store, called a Guideshop. Customers make appointments, which generally last 45 minutes, so one or two employees handle the entire store at once. Most retail stores have to carry each item in a range of colors and sizes, a significant cost, but Bonobos does not, instead using the Web site as its virtual back room. Customers do not leave the store with merchandise; instead, the employees place an online order that is delivered to the customer, often the next day.

"That means the stores carry only items for fit and looks. It has a dark-khaki chino in all 11 waist sizes and four inseam lengths, for instance, and employees use that to figure out what size a customer wears in other pants. But it does not carry, say, a red boot-cut chino in all sizes ... Mr. Dunn said the average in-store transaction was $360, double what it is online, and first-time store visitors buy again in 58 days, versus waiting 85 days between Web site purchases. And, he said, he has cut Web marketing expenses in half as in-store purchases have increased."
KC's View:
Online retailers are not just opening stores. They are identifying places and circumstances where a physical location can bolster brand identity and sales, and they are applying lessons about supply chains and customer needs and desires to the model.

Bricks-and-mortar retailers in all categories would be well-advised to pay attention.

Which is what the retailer in our next story seems to be doing...