retail news in context, analysis with attitude

Bloomberg has a story about how online brands - think Bonobos, Warby Parker, Casper beds, hair color brand Madison Reed. and clothing brand Everlane - that made their bones in the digital environment now are looking to bricks-and-mortar stores as being important, even critical, to their long-term sustainability.

Not coincidentally, these companies are moving in this direction as Amazon expands its fleet of checkout free Amazon Go stores, tests the Amazon 4 Star concept, and continues to grow its fleet of Amazon Books and Whole Foods stores.

“If physical outposts were initially exercises in branding and publicity, they’re now core to long-term growth,” Bloomberg writes. “Retail startups are even starting to include a store opening plan in pitches to venture firms. Many cite the success of a pop-up location to show that they can leverage their online customers and stand out from their online-only competitors.”

Some of the factors propelling the trend cited in the story:

• “Online advertising is no longer the growth accelerant it was.”

• “Retail landlords understand that these upstarts typically require less space than traditional retailers because many of them don’t carry inventory.”

• “Landlords aren’t demanding the long-term commitments once considered standard and are instead offering leases as short as a year with extension options. That flexibility extends to temporary locations, too, with spaces dedicated to rotating pop-ups so the tenants can easily test concepts. To further reduce risk, they’re offering to help pay for store remodeling and taking a small percentage of sales instead of monthly rent.”

• “Some shopping centers are becoming venture capitalists, investing in promising retail startups that could become future tenants.”

Bloomberg writes that “in embracing the offline world, the digital natives have absorbed many of the lessons honed by retailers for the past century: that people like to feel the fabric, try on glasses, get face-to-face shopping tips. The question is whether Bonobos, Warby Parker and the rest have also learned the painful lessons - how over-expanding can cannibalize existing stores - that laid low so many specialty retailers in recent years.”
KC's View:
One of the thins that I think these digital brands bring to the bricks-and-mortar experience is a sense that they can create same-old, same-old stores … they have to develop differentiated environments that people actually want to visit and patronize.

If they are successful at this, they’ll be even greater threats to traditional and often mediocre bricks-and-mortar stores who are weighed down by their legacies, unable to let imagination and innovation take flight.