For online retailers, a real-world store is increasingly the competitive edge in driving online sales.
Global brands such as Apple or Burberry have led the shift in reimagining their high street shops as showrooms for a brand experience that encourages customers to return, whether online or off. Now formerly online-only retailers are following suit with storefronts of their own.
Furniture e-tailers Sofa.com and Made.com have both opened bricks-and-mortar shops to showcase products customers can try before they order online. Fast fashion site Missguided now has prominent stands in stores in both Westfield Stratford and Bluewater, two shopping centers located in London. Boutique chocolate shop Hotel Chocolat was an online-only retailer for seven years before throwing open the doors of its first real-world store; it’s now in 100 locations in the UK.
“Bricks-and-mortar shops are no longer purely about physical sales – they are key touchpoints for brand experience and showcasing product,” says Duncan Gilliard, Director, London Retail JLL.
Some brands offer in-store services that are impossible to replicate online, yet deepen customer loyalty for future purchases – Nudie Jeans allows customers to bring in their old Nudie denim for free repairs or recycling, while fitness retailer Lululemon holds yoga classes in some of its stores.
Yet these stores can have a significant impact on online sales. “Retailers often report a halo effect – when they open a physical store, the online presence among internet users in surrounding areas magnifies,” Gilliard says. Many retailers are now looking to attribute online sales in particular regions to the closest physical store.
Why take it offline
According to McKinsey, the physical store now generates up to 60 percent of sales for former pure-play operators, making them a key way for brands to connect with consumers.
“Real-world stores help customers get to know a brand’s products, which gives them the confidence to buy online,” Gilliard says. In the case of clothing, customers who know their size can order exactly what they need, reducing the need for – and costs of – product returns.
U.S. menswear e-tailer Bonobos has over 20 stores where stylists help customers choose clothing to try on – but instead of walking away with their purchases, customers place online orders at in-store tills for home delivery. Thanks to an existing warehouse and delivery network, the company can provide a shopping experience that sets the brand apart from its neighbors, yet adheres to the service model its customers know.
And brands which started off in the digital space bring that tech influence to bear in their physical stores. Take eBay, whose last Christmas pop-up store used biometric sensors and facial coding technology to suggest gift ideas based on customers’ emotional reactions to particular products.
As consumers increasingly shop on their mobiles, on laptops and on the high street, retailers are grappling with the relationship between their offline brand experience and their online sales.
“People drift in and out of online and physical worlds on their shopping journeys,” Gilliard says. “As recent as three years ago, retailers considered their online and offline businesses separately. Now brands are trying to adapt and accommodate omnichannel shopping, with as many touchpoints as possible to interact with consumers.”
Customers may discover a product in-store, price-check online, and end up purchasing from a third-party e-commerce site. A bricks-and-mortar space has the additional secondary benefit of offering click-and-collect, which has been shown to increase (offline) sales by encouraging customers to purchase items related to their order.
Looking forward to future stores
The evolving role of bricks-and-mortar shops is impacting how retailers design their real estate. With many balancing the needs of having fewer more impactful brand experience stores with making sure they are in convenient and accessible locations.
“Retailers will invest more in the stores they have for an enhanced customer experience that can then drive online sales through third-party sites as well as their own platform,” Gilliard says. “To better understand this relationship, they will have to capture more detailed consumer data and build better customer profiles across these channels.”
As the breadth of online shops gives consumers more choice than ever, real-world stores are increasingly an opportunity for brands to win customers – and for online retailers to stay competitive, their offline presence will be crucial.